Politicised unemployment: Is unemployment in SA really among the highest in the world?

PRETORIA – At times when one sees media and other reports in South Africa, especially on the state of unemployment, one almost chokes from misinformation and propaganda. The news headlines scream: “South Africa has the highest unemployment in the world!" As such, one often wonders how many worlds exist out there. 

Having had an opportunity of visiting many countries around the globe, the situation is not good in our country but certainly not the worst. The official unemployment rate in South Africa is reportedly at 29.1 percent, as per the last Stats SA’s Quarterly Labour Force Survey. But there is something quite interesting in that many countries that are certainly worse-off than South Africa in most respects report single unemployment digits. Unemployment exists “when individuals above a specified age are not self-employed or in paid employment”. 

The International Labor Organization (ILO) in 2018 indicated that over 5 percent of the world’s total labour force was jobless. Another source estimated the figure for global unemployment was 4.0 percent in 2019. Under normal circumstances, unemployment is used as a determinant of how healthy a given economy is. Therefore, a low unemployment rate means the economy “is maximizing outputs while raising the living standards and driving wage growth”. However, in most cases, there is no correlation between unemployment and other economic indices, including poverty, economic growth, human development and standards of living. Every year organizations like Oxfam report appalling inequality and poverty levels in the world. For example, 1 percent of the world’s richest man and Amazon owner Jeff Bezos’ fortune of $112 billion is equivalent to the whole health budget for Ethiopia, a country of 105 million people. At the same time, Ethiopia reports unemployment of under 2 percent.

The politics of unemployment get even more astounding to say the least. The top 10 countries that are reported to have extremely low rates of unemployment in the world are: Qatar (0.14 percent), Niger (0.26 percent), Lao PDR (0.57 percent), Thailand (0.69 percent), Bahrain (0.97 percent), Rwanda (0.99 percent), Tonga (1.02 percent), Cambodia (1.02 percent), Nepal (1.25 percent) and Afghanistan (1.52 percent). With the exception of the oil-rich Middle Eastern countries where their nationals don’t even need to work, the inclusion of the rest of the other countries is extremely suspect. It is possible that the unemployment rate is none other than a feel-good figure for many, including governments and people. Taking the likes of Niger, Ethiopia, Rwanda and Cambodia, the notion of ‘working poor’ is glamorized. 

This is when the usage of statistics that are not linked to reality makes one question the intentions that lie behind any figure. As the old saying goes, lies, damned lies and statistics!

Statistics not immune from manipulation

Is the constant claim that South Africa has “one of the highest unemployment rates in the world” accurate or not? Arguably yes but depending who says it and why he says it. Focusing on evidence, however, it looks like science like statistics is not immune from manipulation to serve a specific purpose. Statistics spin-doctoring is a political art that should not be left to technocrats and specialists due to its wide implications for the country. Governments all over the world produce killer numbers for the economy, crime, health care and of course employment. However, in South Africa, this task has largely been neglected and or exists outside the ambit of the executive. This helps to explain why figures for anything, from unemployment and school dropout rates to crime and HIV infections, appear grossly overstated. This goes against huge sums of money the government spends to deal with all social ills. Unfortunately, many people hide behind these awful statistical figures when they dismiss valid arguments as ‘a non-evidence based shot in the dark’.

My argument is therefore that statistics, especially to measure unemployment rate and economic growth, are a political tool rather than what most people see them be. The reason being, at times poverty is observable with a naked eye but some countries insist on presenting a perfect picture as far as employment is concerned. In many of their cities and villages, hundreds of people wander in the streets with barely anything to do. Yet, these countries report better employment figures than South Africa, this is something plausible and nobody has challenged this phenomenon thus far. What is also even more disconcerting is the fact that millions of people from most of these countries flock to South Africa (and elsewhere) as economic refugees. Why would anyone leave honey to seek a new life in a hell hole?

This is when you ask yourself if countries really use the same measures to calculate the rate of unemployment, and for what purpose. Many countries are in more dire straits and rely on donor aid for survival. Others have such things as high levels of corruption, child malnutrition, poverty, and terrorism. Notwithstanding socio-economic challenges, many countries report low unemployment figures. These calculations seem to be quite problematic because the methodologies for establishing figures for economic indicators are extremely flawed and politicised. At the same time, they are used to influence opinion. 

Yes, a quantitative date has its shortcomings. As the saying goes, "statistics are like mini-skirts, shows a lot of things but does not show what is essential”. However, the argument here is not on statistics and its methodologies as such but how these can be used to manipulate opinion in general terms. For example, Ghana, Kenya and Nigeria a few years ago decided to rebase their economic activity, as measured in the gross domestic product (GDP), to move up the rankings in Africa. Nigeria’s economy became the biggest in Africa overnight. Furthermore, the revised figures made Nigeria the world’s 26th largest economy, up from the 33rd position prior to the rebasing. And Kenya in 2014 became a middle-income country and also surpassed Ghana, Tunisia and Ethiopia to join Africa’s top 10 economies “after a statistical reassessment of its economy increased the size by 25.3 percent.”

Even with the change, Nigeria still remained far behind South Africa when it came to average wealth levels, quality of infrastructure, governance, and financial market development. The reason being, the contributions of cheap Nollywood actors and dancers in busy Lagos and Abuja markets were simply overstated. Also, it is not so much about whether the rebasing of the economy changed the material condition of Nigerians. Nigeria felt good about themselves because for once a positive story was told. The Financial Times reported that many foreign businessmen and analysts looked at the revision positively since it “could serve as a catalyst for further investment”. Ngozi Okonjo-Iweala, the minister for economy and finance said: “The revision will have a psychological impact. It underlines to foreign investors that this country has a large consumer base. It validates the investment thesis.”

Why the unemployment figure is high

Moving back to the contentious topic of unemployment once more. South Africa is a white country so only statistics and data from largely white formal economy count probably that is the reason why the unemployment figure is high. Generally, there has been a reluctance to incorporate the informal sector in the manner in which other African countries have done in the past ten or so years. 

In 2014, the ILO introduced an instrument called Recommendation 204 for the formalization of the informal economy. South Africa, therefore, needs to find ways of accounting for all labour activity or ‘work’ to avoid leaving out millions when unemployment figures are calculated. The figure of 29 plus percent, depending on the definition, cannot be not correct in my honest view. It is not only alarmist but at the same time, we cannot deny that the economy is not producing enough jobs. What is plausible though is that industries like the taxi business keep on growing with the population but they are said to have no effect on unemployment figures. How is that possible?

A large section of the workforce in South Africa (mainly the black majority) is employed in the informal sector such as the taxi industry and other businesses. Admittedly, the country’s informal sector tends to be slightly different from that of other African countries in that, such things as spaza-shops are mere outlets for distributing goods and services of large companies. However, that should not have any bearing on how economic activity is calculated.

According to the ILO-STAT database, some of the countries with lowest unemployment in the African continent are Burkina Faso (6.1 percent), Congo-DRC (4.3 percent), Côte d’Ivoire (2.4 percent), Cameroon (3.3 percent), Eritrea (6.5 percent), Malawi (5.4 percent), Ethiopia (1.8 percent), Mozambique (3.2 percent), Niger (0.3 percent), Nigeria (6.1 percent), Zambia (7.1 percent), and Zimbabwe (4.9 percent). What is extremely confusing is that many of these countries fall under what is generally considered as the highly-indebted poor countries (HPIC), nations at war, countries without any manufacturing base but who rely on a single commodity, states that have no formal sector, countries whose citizens risk lives trying to get to other countries, etc. 

This essentially means that South Africa fares worst than the traditional third world, and ‘failed states’.

Niger, which is pretty much part of the Sahara desert, is one of the dead poor countries which does not even have a single factory in sight and the economy relies on gold and uranium mining. In Niamey, hundreds of men get hired to clean the dusty streets at night during the windy Hamatan storms. Even though the streets look pretty much the same in the morning, their “work” is accounted for in the GDP calculations. With all these realities, Niger has close to zero unemployment rate. 

Even the likes of Mali (9.8 percent), Mauritania (10.3 percent), Nigeria, Senegal (6.5 percent) and Gambia (8.9 percent), as well as Ghana (6.8 percent), record low unemployment compared to South Africa. Millions of people from these countries put their lives in danger by cross both the scorching-hot Sahara desert and raging Mediterranean waters trying to get to Europe in search of a better life. The Sahel region and West Africa have generally high instability and ‘unprecedented terrorist violence’, according to the UNOWAS (UN Office for West Africa and the Sahel) chief Mohamed Ibn Chambas. 

Portraying the post-apartheid state in a bad light

In additions, regions such as European Union (6.5 percent), Latin America and Caribbean (8.0 percent), HIPCs (3.9 percent), North America (4.1 percent), Sub-Saharan Africa (6.1 percent), Libya (17.3 percent) and South Asia (2.7 percent). It, therefore, looks like South Africa is one of only a handful of countries that uses conservative approaches when measuring the unemployment rate. Again, this is not to suggest that the country doesn’t have the problem of unemployment. But there could be a bigger intention to portray the post-apartheid state in a bad light. As the country was made to join the World Trade Organization (WTO) in 1995, it cannot be beyond suspicion that economic measures are not comparable to those of other countries at similar levels of development such as Nigeria, Mexico, Brazil and India. 

As a result, South Africa appears to be an outlier together with Angola (30.7 percent), eSwatini (22.9 percent), Greece (18.1 percent), Namibia (33.4 percent), Bosnia and Herzegovina (32.57 percent) and North Macedonia (21.6 percent). According to present thinking, this is an elite club of unemployment in the world. Doesn’t government really see a problem with this? If not, it should be worried and start to do something about it. Perhaps not so much with using conventional economics but through leveraging its political might. Just like broader economic policy, other governments like the US effectively utilize monetary policy and statistics to deliver positive messages and to show that it is doing something to address socio-economic problems. 

The Obama administration announced an astronomical figure of over $800 billion as its contribution to solving the economic meltdown. But the present administration is even more adept in how it deploys statistics. Brooks Jackson presented statistical measures to show how things have changed since Donald Trump took office. In October 2019, for instance, the economy added 6 million jobs and the unemployment rate at 3.4 percent dropped to the lowest level in nearly 50 years, economic growth “fell far short of the annual 4 percent to 6 percent Trump promised”, number of murders dropped 6.9 percent, median household income rose 2.3 percent, and trade deficit went up 30 percent. It really doesn’t matter whether an ordinary American in projects and slums in Chicago or Alabama agrees, the point has been made. Trump’s probability to be voted again for another term of office is above 0.5.

At this point in time, South Africa wants to attract foreign direct investment (FDI). But this goal is not in sync with how the country wants to be seen. Analysts and politicians never get tired to paint a gloomy picture of the economy. Imagine if Stats SA were to be asked to use a different methodology to calculate both the GDP and unemployment, the country’s fortunes can change overnight. The argument that the likes of Ethiopia are said to be recording high growth rates is due to their ‘late start’ is neither here nor there. If Ghana, Kenya and Nigeria could rebase their economies and created a buoyant mood as a result, what stops South Africa from doing the same?

What would come as a surprise to many is that statistics has its origins in politics. Philip M Hauser mentions, “historically considered they were state-istics and statisticians were once ‘statists’”. As such, numbers are useful to make an administration ‘look good’, to ‘make a case’ or support a decision already taken on other than ‘factual grounds’. The independence of a government entity such as Stats SA sometimes is not in line with political goals and policy. Not that one argues for ‘doctored truths’ but it is in the hands of government to ensure that sensitive statistics is handled in a circumspect manner to reduce alarm and unnecessary affliction. Already, South Africa suffers from a notorious image of a country with high unemployment. This is definitely not good for the country’s reputation and standing in global affairs, be they economic, social or political. 

Poverty and other hardships

Many critics of this proposal would point out that such a move will not necessarily change anything. That would be a correct observation but as demonstrated above economic indicators have little or nothing to do with poverty and other hardships. As Kenyan Minister for Devolution and Planning, Anne Waiguru pointed out a few years ago, an increase in the GDP (and GDP per capita) “does not necessarily mean that Kenyans will be better off nor does it imply that the existing social-economic challenges have ceased to exist. Kenyans will be just as poor – or just as wealthy – as they were a year ago.” 

Another point is that when South Africa rebased its economy that would automatically catapult it to become a first-world country. The mere fact that both Niger and Zimbabwe, for example, show low rates of unemployment doesn’t mean life is comparable to France and Switzerland in those countries. But what South Africa needs to understand that the world is obsessed with various economic indicators. So, failure to present a favourable picture certainly works against the country. Insistence on showing low economic growth and high unemployment implies that South Africa is viewed as a country that is about to fall apart. Hence, world bodies like the International Monetary Fund, World Bank and rating agencies tend to be overly obsessed with South Africa. This is our own making, statistical measures for employment and economy are in our control. We can take a cue from Kenya and Nigeria to turn our economic fortunes around. 

It is necessary to point out that a growing number of economists already oppose the use of things like GDP, and even unemployment rates to measure social progress. American economist Joseph Stiglitz suggests a move away from obsessing with the GDP to measure economic performance and social progress, or lack thereof. Indeed, economic performance and social progress cannot be determined only using economic indicators like GDP or GNP alone because they don’t tell the whole story. It is therefore for the reason that the likes of Stiglitz oppose the use of economic indicators as per standard economic theory. Stiglitz argues that chasing GDP growth results in lower living standards, therefore better indicators are needed to capture well-being and sustainability. Ever heard of the gross domestic problem?

In the absence of these ‘better indicators’, South Africa needs to stop being timid as if the world will feel sorry for us when we report low economic growth and or high unemployment figures year on year. It, therefore, means that a change of mindset is needed to position the country favourably in the minds of those who make investment decisions locally and abroad. 

Finance minister Tito Mboweni’s stunts of carrying aloe plant when delivering budget speeches change nothing. Even if he takes along a malnourished donkey to the house next week, still there will be no difference. 

Power is in our hands to improve the country’s image and the answer lies in statistics among many other things. Lessons from other countries of similar economic development will certainly save us from ourselves.

In conclusion, the politicization of statistics is real and many countries utilize good figures to achieve political ends. One has to question who prescribed the methodology that Stats SA uses and why. It appears that simple things like statistical methods were or are used to undermine the democratization in South Africa. There is a perception that economic indicators seek to emphasize, that blacks are an economic burden and also do nothing to improve their lives, economically speaking at least. No one cares to find out how the millions who are not employed in the formal sector survive and carry on with their lives. Blacks are ‘invisible citizens’ in their own country. 

The politics of economic statistics is used to poke fun of others and to undermine others. It cannot be left in the hands of statisticians and economists to decide how to generate figures. Statistics is politics, and politics is statistics. The two cannot be divorced from each other.

Siya yi banga le economy!

Based in Pretoria, Siyabonga Hadebe is an independent commentator on socio-economics, politics and global matters.

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