Across the world a revolt has been underway, and whether it’s the Arab spring or the election of Donald Trump, there is a common cause – large scale unemployment, a lack of work prospects and job security. A fear of competition for jobs underlies the racist appeal of Trump, the anti-migrant jingoism of Brexit, the violence characterised by xenophobia in South Africa.
If we hope to address the situation, the world must face reality and give up on the whole notion of employment, the magical thinking that government can create new jobs, the fantasy that business is even interested in job creation. What is required of government is to give people lives not jobs.
Employment is being squeezed at both ends – top and bottom. Machines and robots will take away more and more physical labour, while algorithms and software will render various professional service providers redundant. Put together, perhaps two billion jobs will be lost in the next two decades.
Sooner than we think, supermarkets will be without cashiers, cars will be driverless, factories buzzing with workers will become serene 3D printing machines. Artificial intelligence will replace 80% of what doctors, tax accountants and legal advisers do. The way a chess computer knows every move ever played in the history of chess, the new legal app will have every court judgement, law and precedent at its immediate recall.
On the other end, in the 1990s India, China and Eastern Europe doubled the global labour pool, from 1.5 billion to three billion workers. At first, the blue-collar livelihoods of tens of millions in the West became precarious or were lost as jobs went offshore and industries and mines were closed as uncompetitive. But today, even the low paid workers of China are feeling the squeeze as they are under-priced by even cheaper labour entering the market as it acquires the same skills and global connections as they have but in South-East Asia and Bangladesh.
It is simply impossible for the world to absorb a growing population with decent jobs paying living wages.
Unemployment in South Africa
Nine million of South Africa’s 36 million working-age population are currently unemployed. Over 17 million South Africans survive on state social grants. And both these figures are climbing with little prospect of reversal.
The official unemployment rate in South Africa is 27%; the expanded definition, which includes discouraged job seekers, sits at 36%. More than half of all young adults are unemployed.
In every election campaign since 1999 the ANC has promised to “create a million jobs”. This was later qualified as “job opportunities”. Even the opposition Democratic Alliance resorted to the same slogan and magical round number in the 2004 and 2009 elections.
Then President Zuma pledged to place “the creation of decent work” at “the centre” of economic policies. Zuma upped the ante, this time promising to create five million jobs.
Had this pipe dream even happened in the time frame the ANC set, unemployment would still have sat at over 20%.
Treasury predicted in 2010 that to generate 5.5 million jobs, the economy had to see sustained growth of 7% for 10 years. What has happened since those promises were made is that South Africa is shedding jobs. The biggest job losses this year were in the manufacturing, construction and the trade sectors.
The economy, if adjusted for population growth, is not expanding, but shrinking. The gross domestic product (GDP) growth rate was 0,2% in the third quarter of 2016.
The situation is further frustrated by the very poor education and rotten schooling with which young South Africans enter the employment market. Thousands of university graduates do not have the basic prerequisite skills to compete in the world market. The heart-breaking truth is that millions of South Africans have only a slight job prospect.
And there is a new problem. If you do go to college to train as something, what do you train as? At the rate at which globalisation together with technology is reshaping the job market, what do you study to “become” when the vocation you have chosen might be replaced within a decade by a robot or some computer code?
In South Africa, the only thing keeping a lid on this time bomb pressure cooker is the social grant system. The number of households receiving at least one form of social grant stands at 45.5% (it was 29% in 2003).
Currently, this “social protection” budget is R167 billion of South Africa’s R1.2 trillion budget or 14%.
It is split as follows: R59bn old-age grants (R1500 per beneficiary per month), R52bn child support grants (R350 per month per child), R20bn disability grants (R1500 per month); R18bn provincial social grants; R9bn other grants, and a grant administration bill of over R9bn. South Africa’s extensive grant system includes care dependency grants (R1500), foster child grants (R890), and grants in aid (R350).
According to Statistics SA, for every R100 national government spends on social grants, R42 goes to family and children; R41 to the elderly; and R16 to the sick or disabled.
Many, including the president, have expressed their concerns over this large amount and some have gone so far as to predict that if the current rates of extending and increasing social grants continues, it will absorb the entire national budget. Underlying such claims is more prejudice sound economic modelling. The social grant budget is 4% of GDP. At South Africa’s current dismal growth rate, it will be hard to sustain, but almost nothing is sustainable at a rate of under 3% GDP growth. Debt stands at R1.8 trillion and the costs of servicing it are escalating.
With the exception of the court ordered foster parent grant, all the grants are means tested. You have to be poor to qualify. But there is no grant if you are healthy, over 18 but under 60 years of age, and unemployed, no matter how poor you are. Millions of people are jobless and grantless. Without the means to create employment, the only feasible way forward is to have a guaranteed, universal or basic income grant (BIG) for everyone with no means testing and no expensive administration. The idea has been around for a long time. Thomas Paine even proposed it in a pamphlet in 1797.BIG was the big idea a decade ago in South Africa but the ANC and big business poured enough cold water on it to drown the sun. Yet there doesn’t seem to be any obvious feasible alternative. Government cannot even implement its National Development Plan, let alone decide on what kind of an economy South Africa should be.
The argument for BIG is overwhelming. The money is spent in the economy and much of it is recouped through taxes and VAT. Politically, however, it will be hard to implement, and it will probably only happen once the professional middle class, their children, and the upholders of the status quo start finding themselves made as redundant by artificial intelligence as an elevator operator.
Some governments are beginning to realise that with their burgeoning populations of unemployed restless youth, including educated unemployed youth, they will have to resort to a basic income grant or face the kind of turmoil the world saw in Egypt and Tunisia.
In a referendum in June, the Swiss voted against a basic monthly income of 2500 Swiss francs (€2300) per adult and 625 francs for children under 18. But unemployment is only 3.5% in Switzerland.
Finland is undeterred, and the government plans to roll out a pilot scheme to test the idea by giving 10,000 working-age adults a monthly tax-free wage of 550 euros.
In South Africa, it is time then to stop promising the millions of unemployed that they will have job opportunities if they vote for this or that political party. It is also time to stop making employment the centrepiece of legitimacy as a citizen. The jobless need to be treated with equal respect and dignity, and society needs to recognise that being workless is not the fault of the unemployed.
Moreover, people need to be prepared for facing a life without employment. Massive emphasis on social activities – whether it is art, philosophy, sport or crafts – is urgently needed if communities with thousands of workless people are to live in peace and find happiness outside the validation of the workplace.