COSATU statement on the second quarter unemployment figures

The Congress of South African Trade Unions has noted the latest quarterly employment statistics that shows that 2,2 million jobs were lost in the second quarter of 2020. These figures are seriously depressing but not at all surprising because the economy itself declined by 51% in the second quarter of the year.

Unfortunately, this is what happens when you have a government that is hellbent on implementing a framework of policies that do not place employment creation as a priority. It bears emphasising that our rising unemployment rate was already at a catastrophic scale even in the first quarter- which called for a paradigm shift away from the Neoliberal macroeconomic framework. 

 This unemployment figures prove that economic decisions and interventions that have been implemented so far have failed. The fact that President Cyril Ramaphosa’s administration implemented fiscal austerity measures at a time of a persistent private sector investment strike has entrenched this economic stagnation and worsened the situation.

This is very alarming, though, considering that 14,1 million people of working age are officially unemployed and many of them are women and young people. COSATU warned in February this year that the government austerity strategy was going to reproduce this vicious cycle that is characterised by episodes of technical recessions, rising unemployment rate, and revenue shortfalls

 This jobs bloodbath will further trap the economy in a vicious cycle because the purchasing power of many workers will be greatly reduced. This is bad for an economy where consumer spending contributes about 60% on the economy.

However, we acknowledge that there were other detrimental developments that compounded the situation since the outbreak of COVID-19, amongst others these include the subdued global economy, vast scale and deepening levels of corruption and wastages within the state.

This situation is likely to get even worse considering CCMA is currently inundated with many section 189 notices and many employers plan to retrench as soon as the UIF TERS Fund money runs out. 

This situation calls for a bold economic recovery plan that will have a specific focus on the creation of jobs through labour intensive projects. The growth model of the previous years that prioritized gross domestic product growth, while neglecting employment creation has left us with the current structural and stubborn high unemployment levels.

 The post-COVID-19 period requires a complete economic restructuring, which will see the revitalisation of key labour intensive sectors such as manufacturing, construction, mining, and agro-processing.

 The current unemployment numbers also make a case for the long-standing demand by COSATU to review the cost of firing through the increase of severance pay. The federation is of the view that there is an abuse of section 189 of the LRA by employers and retrenchments, instead of being the last resort for businesses.

This is opportunistically abused by employers that seek to maximise profits at all cost. COSATU further calls for the review of the severance pay thresholds as well as a broader review of section 189 to empower trade unions to negotiate with employers as opposed to consultation. 

The Federation’s affiliates are encouraged to approach their respective bargaining councils to embark in earnest discussions and negotiations with employers through the bargaining councils. Engagements in the bargaining councils must conclude on a strategy to best avoid retrenchments through various mechanisms currently available in the bargaining councils.     

 Issued by COSATU

Sizwe Pamla (Cosatu National Spokesperson)

Tel: 011 339 4911
Fax: 011 339 5080
Cell: 060 975 6794