State religion does not have all the answers to jobs crisis

OUR state religion appears to be the worship of the state. Heaven knows, to sustain the analogy, there now appear to be no shortage of new and unlikely adherents to this belief. Barack Obama’s administration is now effectively the controlling shareholder of General Motors and Gordon Brown’s government owns 70% of the Royal Bank of Scotland. The deep global recession has created some unlikely converts from unfettered market capitalism to more state directed economic leadership.
But, back home in SA, as I surveyed the jobs massacre contained in the figures for the first quarter released this week, which show that 179000 jobs were lost and that the “distressed labour market” could yet shed another 200000 jobs before year-end, it occurred to me that what we need now is a healthy dose of local agnosticism in order to innovate and create new work. In other words, less ideology and more realism.
Last Friday, Economic Development Minister Ebrahim Patel appeared to make an important concession: he said that government’s policy of promoting “decent work” would not exclude “the creation of temporary, low-paid jobs in the short term”. He made the further concession that the 500000 jobs to be created under the expanded public works programme “would not, in themselves, be proper, permanent, well-paid jobs”, but they could create a bridge into the labour market.
This dose of realism seemed to be in line with the candour of Trevor Manuel , who in his previous incarnation as finance minister said, after presenting his last budget in Parliament, that the problem with “decent work” in a time of crisis was that “all jobs are hard to come by, and the more adjectives you add, the harder they will be”. Or, as the old adage expressed it, the only thing worse than being exploited is not being exploited at all.
Whether these statements represent shafts of light or a false dawn on the gloomy debate around job creation is difficult to assess. This becomes even more apparent when the assault launched by Labour Minister Membathisi Mdladlana on labour brokers and the casualisation of work is taken into account. Last month, he told the congress of the National Union of Mineworkers , “the reality is labour broking is a form of human trafficking. These companies sell the labour of workers to the highest bidder and then pay them the lowest wage ... it allows workers to be traded for profit just as if they were meat and vegetables.”
When I visited the headquarters of the largest private employment agency in SA, Adcorp , this week, I expected after the minister’s pronouncement to find a Dickensian pit of human misery. Instead, the ultramodern office block in Bryanston houses a go-ahead company where I had an interesting discussion with the splendidly named Loane Sharp, who serves as the company’s labour market analyst.
He made the point that the much-maligned labour brokers represent a R23bn industry, which since 2000 has introduced about 3,5- million temporary, part-time and contract employees into the labour force, approximately 2- million of whom are first-time jobseekers, 92% of whom are African, and 85% of whom are aged 18-35. Of even more significance was his analysis that a third of these employees secured traditional permanent jobs within a year and 47% did so within three years.
In other words, far from being reprehensible and “human traffickers”, the brokers are, in fact, SA’s principal entry point into the labour market for unemployed African youth.
Sharp’s analysis runs counter to the Congress of South African Trade Unions’ (Cosatu’s) blunt instrument: they are calling for a ban on labour broking, which could lead to the loss of, perhaps, a million jobs. The labour minister is advocating the quasi or de facto nationalisation of private employment agencies. But the agenda behind this agenda is, simply, that the bulk of these temporary or casual workers are nonunionised. They, therefore, compound Cosatu’s crisis of relevance and its shrinking membership and revenue base.
Another voice, which deserves to be heard is the estimably sensible one provided by Ann Bernstein and the Centre for Development and Enterprise/Business Leadership SA’s “5- million jobs initiative”. They offer a welter of practical initiatives to resolve the exquisite Catch 22 in which the vast pool of young, unskilled jobseekers find themselves. As Bernstein put it: “They can’t get a job because they have no work experience and they can’t get work experience because they can’t get a job”.
The most persuasive statistic the centre provides to bolster this assertion is the fact that more than 70% of 15-30 year olds who want a job have never been able to find one.
To quote the vanquished Thabo Mbeki , the crisis on the job front calls for a “business unusual” approach. And that means that adherents to the old gospel of the state religion need to listen to a few agnostic voices.

*Published 26 June 2009 in Business Day

Lesson for SA textiles sector in the fate of an American icon*

TWO features of power and affluence stand out from my Durban boyhood. The one was textile mogul Philip Frame, and the other was the swanky American car, the Pontiac.
Frame’s Waverley brand literally blanketed the country — protected from competition by the high tariff walls and the policy of import substitution, which was the apartheid state’s quid for Frame’s quo of locating his factories in border areas designed to keep black labour far from the white heartland. In those times, there was little talk of trade liberalisation.
The Pontiac, a far more exotic sighting than a Frame blanket, fed schoolboy fantasies of American excess . The reality of SA was more accurately located in the satanic mills of the Frame Textile group, where in 1973 ultra-exploited black workers defied the law and organised a strike. Frame was unmoved. But the protest galvanised the formation, and ultimate legalisation, of modern trade unions in SA.
There are no end of ironies in the fact that today the South African Clothing and Textile Workers’ Union (Sactwu) has, via its investment arm (nogal) a significant stake in Frame parent company Seardel , and thus in Frametex, as the fast-fading textile empire is today called. Philip Frame had access to the National Party government via his long-standing membership of the prime minister’s economic advisory council. Sactwu’s influence with today’s government is even more direct. Its outgoing secretary-general, Ebrahim Patel, is now the minister for economic development.
He and Trade and Industry Minister Rob Davies appear eager to use Industrial Development Corporation (IDC) funds to bail out Frame, which is bleeding R30m a month, and will be closed unless it receives government life-support.
This is where the Pontiac comes in. This uncompetitive icon will cease to exist. It’s part of the price the US government has extracted for its infinitely larger (perhaps ultimately R500bn) bail-out of the US car industries. At General Motors, CE Rick Wagoner was replaced; 13 factories will close by next year ; 21000 jobs will be lost, and the powerful United Auto Workers Union has had to accept restrictions on employee entitlements. This stringent package was described by Michigan governor Jennifer Grenholm as “tough love”.
Actually, “tough love” was the exact formula Trevor Manuel prescribed for the South African textile industry in 2004. He later told Parliament “the country cannot protect uncompetitive industries from destruction through global exposure”. Reserve Bank governor Tito Mboweni was even more hawkish. He opposed the three-year quota on cheap Chinese imports when it commenced in 2006. He told MPs there was not “a dog’s chance” that the industry would become more competitive in the period, having failed to modernise or globalise in the preceding 12 years. Protection through quotas would simply raise consumer prices and fuel inflation.
Well, despite our government obliging the Chinese on the Dalai Lama, their government was decidedly disobliging last December when it declined to renew the quota restrictions on textile imports. The jobs massacre that followed and Frame’s proposed closure proved the point made in a study on, of all things, a 3- pack of women’s panties. The Chinese version retails in SA for 10 times less than the South African equivalent. But now Davies, a softer touch than Manuel, says there is “a strategic importance” in preventing local clothing manufacturers from being dependent on imports.
He did not elaborate on this curious proposition, and fed the impression of a policy being made on the hoof, in response to insider pressure. Leaving aside the glaring conflict of interest between Patel and Sactwu, the government is sitting with the Harvard report. It warns against an industrial policy which seeks to pick and predetermine “ winners”. But if the government bails out Frame, despite the IDC finding no “economic merit” for doing so, it will be backing a loser. Of course, there are 1700 jobs to be considered and the retention of plant and capacity. But, as industry experts point out, there are 600 companies in the sector — all exhibiting the stress fractures and ailments consequent to the recession and the cheap imports. There has been a 46,7% rise in all corporate bankruptcies in the first quarter of this year, compared with last year. How will Davies and Patel determine which is “of strategic importance”, which are “too big to fail” and when does the government apply the laws of moral hazard? What about the most vexed issue of a bail-out: “privatising profit (for the company) and socialising losses (for the taxpayer)?”
A bail-out policy requires transparency, thought, and fairness. It needs to account for, and answer to, the whole of society — from workers, to consumers, to competitors and to our global commitments. It’s a tall and difficult order. And some Pontiacs will get ditched in the process.

* Column in Business Day, Friday 29 May 2009