Monday, Mar 15, 2004
Rising unemployment
By Sharon LaFraniere
South Africa's failure to keep jobs at home and to stimulate new ones is turning into one of the biggest disappointments of the post-apartheid era.
WHEN TIGER Wheels opened an automotive wheel plant in the faded industrial town of Babelegi, South Africa, six years ago, the crush of job seekers was so enormous that the Chief Executive, Eddie Keizan, ordered metal benches and a corrugated iron roof put up to shield them from the midday heat.
"There were hundreds and hundreds of people outside our gate, just sitting there, in the sun, for days and days," Mr. Keizan recalled in an interview. "We had no more jobs, but they refused to believe us."
The little shelter might just be the last expansion of this South African company's operations in Babelegi. It is hiring again, but not in South Africa, where one person in four is jobless. Instead, it has a new plant in Alabama, is looking to open another in China and may expand its subsidiary's factory in Poland.
South Africa's failure to keep jobs like that at home and to stimulate new ones is turning into one of the biggest disappointments of the post-apartheid era.
After Black majority rule triumphed 10 years ago, the Government bent over backwards to attract businesses to an economy weakened by the export of capital and a global boycott during apartheid. It cut inflation, liberalised trade and reduced the budget deficit.
But sound economic policies have not compensated for unskilled workers, high labour costs, crime, AIDS, and the fact that Africa is, simply put, a bad business address.
Today, South Africa's underclass is larger than ever. Counting those who have given up the search for work, unemployment has jumped to more than 40 per cent, from 31 per cent a decade ago. The gap between rich and poor remains one of the world's largest. By some measures, it is even wider than before.
"If things go on like this, we could experience a new struggle, a class struggle," said Sampie Terreblanche, an economist with the University of Stellenbosch, who sees the lack of jobs as the biggest threat to the pact that has bound Blacks and Whites together in the new South Africa.
The challenges to economic growth are demonstrated aptly enough by Tiger Wheels. For 20 years, the company made aluminium wheels only in South Africa. Then, in 1994, its German subsidiary opened a factory in Poland that now employs 500 people.
The Polish plant turns a profit. The South African plant, with 700 workers, either breaks even or loses money, Mr. Keizan said. The main reason, he said, is that the Polish workers, who are much better educated but paid the same wage as the South Africans, make fewer mistakes.
For every 60 wheels cast at the South African plant, three must be melted down and recast, 30 per cent more than at the Polish plant, he said. In his view, that is because nine out of 10 of his South African workers never finished high school, while the same proportion of the Polish workers has university degrees. One-fifth of the South African workers can neither read nor work a simple calculator, he said.
Martin Glatt, a co-chairman of Tiger Wheels, said it would be costly to train the South African workers to the level of the Polish workers. Not only are the Poles more efficient, they are also healthier. At its South African plant, Tiger Wheels loses one worker a month to AIDS.
That pain is widely shared. One-third of South African companies report that AIDS has lowered profits, according to a recent survey by a business coalition. Economists estimate that AIDS cuts one percentage point off the growth of South Africa's gross domestic product. That translates into a loss of jobs that the country can ill-afford.
President Thabo Mbeki, facing an election next month, has promised a $2-billion, five-year programme to employ a million people to build roads, sidewalks and pipelines. But that cannot make up for lack of growth in the private sector, where many companies are still playing it safe.
The economy's annual growth rate of 2.8 per cent is less than half of what the Government predicted after apartheid was ended.
Apartheid left millions of Blacks with little education and no trades. Nearly 60 per cent of those who are jobless have never worked, according to the National Labour and Economic Development Institute.According to a study of wages and productivity conducted in 2000 for the Government's finance department, South Africa's wages are five times higher than Indonesia's, even though its workers are only twice as productive.
In Johannesburg, at least, executives say crime is also a deterrent. In a World Bank survey in 2000, heads of major manufacturers in or near the city said crime and violence were the biggest reasons their companies did not expand.
For foreign investors, in particular, Africa's image is yet another hurdle. South Africa's financial stewards, banking system and ports may be First World, but the nation itself still rests in a continent stained by corruption, war, and poverty.
--New York Times News Service
Copyright © 2004, The Hindu.