IS 27% ENOUGH?

27.1% – that is the official unemployment rate.
36.3% – that is the “unofficial” (expanded) unemployment rate.

These are the worst figures in almost a decade especially when taking into consideration that in 2003 we were merely 45 million people in 2003 and have grown over the 51 million benchmark in 2011; of which about 35 million are of working age.

Indeed the trend looking forward is downward.

According to a Bloomberg report, South Africa has the highest jobless rate of more than 60 emerging and developed countries.

Indeed the trend looking forward is downward.

South Africa has struggled to rein in unemployment after the 2009 recession as Gross Domestic Product (GDP) growth stayed below 3.5% annually and is projected by the government to slow to 0.5% this year. The sluggish economy, policy uncertainty and rigidities and instability in the labour market are some of the factors that rating companies like Moody’s Investors Services and S&P Global Ratings, which will publish their assessment of the nation’s creditworthiness in the next two weeks, have highlighted as risks.

We have been on the tether of a downgrade for sometime now – this report by Stats SA might be the last straw.

There is a grand reason why companies have been withdrawing capital. There is a reason why Barclays is selling ABSA; there is a reason why Old Mutual is selling Nedbank.

Indeed the trend looking forward is downward.

Indeed if we do sink into “junk” status (even though the term “junk status” sounds somewhat cliche already) in combination with weak Rand-Dollar (which will weaken even more so); in combination with the drought we are experiencing – which will drive up food prices once we start eating into grain reserves (let us not forget the weak Rand pushing up import prices of food); the weak Rand will make fuel even more expense; thus pushing the prices of all commodities up.

Indeed the trend looking forward is downward.

This will most likely force the government’s hand into potentially taking more loans to create a stimulus package, which will push more Rands into the system and thus weaken the Rand even further.

Indeed the trend looking forward is downward.

A weak Rand creates more capital flight. Small businesses will close. Medium size businesses will struggle to stay afloat; especially those reliant on imports of goods and services.

Indeed the trend looking forward is downward.

That the state wishes to impose a minimum wage sounds lovely in principle – but it will lead to more job cuts in SMME; larger companies will invest in mechanisation and automation – all leading to more job cuts.

Indeed the trend looking forward is downward.

Companies will focus on the export of products due to the weak Rand; this further reduces the supply to of said products to local markets, thus pushes the prices of said products and related products up.

I haven’t even touched on the credit issues in South Africa…

This is all overly simplified; as I could go on, and on.

Times of Austerity are ahead – however there is one upward trend:

Hard times create strong men. Don’t believe me? Just look at our History.

By Dean Dart -Treasurer / Economic Affairs Spokesperson Front Nasionaal Suid-Afrika

South Africa Today – South Africa News