S.Africa’s unemployment rate rises to 25.6 per cent in Q2 2013 - CNBC Africa

S.Africa’s unemployment rate rises to 25.6 per cent in Q2 2013

Southern Africa

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“This is quite shocking to hear. The real issue though is that the jobs aren’t being lost in the economy that doesn’t count. It’s in manufacturing, transport, construction and financial services,” Michael Bagraim, Labour Lawyer at Bagraim’s Attorneys, told CNBC Africa on Tuesday.

He added that this issue is cause for major concern because the manufacturing industry is the backbone of the South African economy as it feeds into all other job sectors of the country.

According to Adcorp, 26,189 permanent jobs and 11,559 temporary jobs were shed in total. The biggest losses were observed in manufacturing, transport, construction and financial services amounting to 18,000 job losses in total in those sectors.

"July is notoriously a bad month. It's winter here in South Africa, tourism is down and buildings comes to a standstill during rainy periods," said Bagraim.

he also believes that one of the factors causing job losses is due to the South African government being steered by trade unions such as the Congress of South African Trade Unions (Cosatu).  

“We hear about Cosatu pushing the government to change the labour laws in order to make it more difficult to hire and fire people. That has got to be the most ridiculous thing we've ever had,” he exclaimed.

Adcorp has projected that the labour market’s performance will most likely have a significant effect on the 2014 general election.

Bagraim therefore added that he hopes the election results will cause government to stop being led by trade unions.

“We are going to see unemployment rising right up to May next year when we have the elections. Hopefully at those elections there will be a fall out so government can see that Cosatu isn’t leading us down the right path,” added Bagraim.

Another concern, as pointed out by Adcorp, is that 1 in 3 people living in South Africa are employed by the government. The public labour pool is the only sector where employment is growing. Bagraim stated that this is not beneficial to the country’s economy.  

“It certainly isn’t good for growth because that just eating into the fiscus. It’s taking money away from the tax that the business communities pay across. It becomes completely unsustainable,” he said.

He explained that job growth in the public sector does not create new wealth or taxes, it merely takes away from it and stunts the national economy’s growth.