‘Cut bonuses and dividends’

Large companies should cut bonuses to managers and dividends to shareholders and use the money to create jobs for the unemployed instead.

These are among the sacrifices Eastern Cape premier Oscar Mabuyane believes corporate SA should make to help address the unemployment crisis.

“In times like these, all of us, especially those in the private sector, are required to sacrifice by directing some of the money that would be paid as dividends to shareholders [and]  bonuses to managers, to create jobs for the scores of unemployed people, which includes unemployed graduates, [and] save the jobs of many workers at risk of losing them,” the premier said on Wednesday.

“We have an opportunity to work together as leaders of sectors to create these opportunities for the people of this country using the investment [and] manufacturing incentives the government has made available to private companies.”

Mabuyane was reacting to the latest labour force survey statistics released by Stats SA on Tuesday, which revealed that unemployment in the Eastern Cape grew by three percentage points to 39.5% between October and December.

During this period, the number of unemployed people in the province increased by 18,000.

The survey revealed that, in total, there were 904,000 unemployed people aged 15 to 64 in the Eastern Cape at the end of December.

“It is in the interest of all of us in the country to ensure that we create jobs for those unemployed, give business contracts to the small businesses of our country so that they further create jobs,” Mabuyane said.

The Eastern Cape has the highest unemployment rate in SA, followed by the Free State, which was sitting at 35% in December.

The overall rate of unemployment in SA remained unchanged at 29.1%.

The sectors hardest hit by job losses in the fourth quarter were trade (which shed 21,000 jobs), agriculture (19,000) and manufacturing industries (7,000).

But the utilities industry created 4,000 new jobs, about 13,000 more people were hired in the transport sector and 18,000 in the community and social services sector.

Mabuyane believes that one of the reasons for the increase in the official unemployment rate may be that previously discouraged jobseekers, who had given up searching for work, have again started looking for jobs.

The number of discouraged jobseekers in the province dropped by 73,000 in the quarter.

“We think this may be the reason our official unemployment rate is up, because people who were discouraged started to be optimistic to seek employment,” he said in a statement.

Another factor was the drought.

“One of the reasons we saw job losses was the punishing drought that slashed 19,000 jobs in the agriculture sector because lack of rain reduced production activity in this sector.”

Mabuyane was optimistic, however, that investments made using the provincial government’s R1bn economic stimulus fund would yield positive long-term results and reduce unemployment.

The fund is geared towards promoting catalytic economic development initiatives to grow the economy.

“The current government continues to put in place strategies anchored on the provincial development plan to push the provincial GDP growth rate from 2.8% to 5% by 2030 [and]  increase investments into the province from 16.5% of GDP to 27.1% by 2030,” Mabuyane said.

“We are confident that when we implement these strategies we will reduce unemployment in the province from 39.5% to 10%, and poverty from 36.7% to 7.7%, by 2030.

“This is possible. It can be done.”

President Cyril Ramaphosa is set to address the nation tonight and Mabuyane said he hoped the president would announce efforts to speedily address the jobs crisis.

“The investment drive led by President Cyril Ramaphosa has a percolative effect in that some of the companies investing money into the province create direct and indirect jobs.

“We are hoping the president will talk more about how the national government will lead a spirited effort to move with [the] speed of light to address unemployment in the country,” Mabuyane said.

When asked to comment on Mabuyane’s call for companies to make sacrifices to create jobs, Nelson Mandela Bay Business Chamber president Andrew Muir said the unemployment situation in the province was extremely serious and its solution required a collective approach from all parties concerned.

Muir said the government needed to continue to create an enabling environment for business to thrive and that measures to enhance the ease of doing business would support existing investment and encourage new investment in the region.

“Additionally, access to resources such as sustainable and affordable electricity and water is key to economic growth,” he said.  

“As the Nelson Mandela Bay Business Chamber, we believe that meaningful collaboration, as guided by our quadruple helix model, between academia, business, civil society and government is the way to go.

“What is required is that each of the parties continue to take responsibility for their part.” 

Muir said it should also be noted that SA’s economy had been sluggish.

“For a number of reasons (some historical), the Eastern Cape is one of the areas that gets hit the hardest by an economy with jobless growth.” 

SA’s economy was also not immune to developments in global economies.

“As there’s been a lot of uncertainty in major economies (including the effects of the latest coronavirus outbreak) the country needs to consider more robust economic policies in order to attract new investment, creating new jobs and, indeed, protecting current jobs,”  Muir said.