Solidarity has responded to a report by Cameron Morajane, director of the CCMA, which claimed that the large-scale job losses in South Africa can be attributed to the Fourth Industrial Revolution (4IR).
According to Morajane, it is expected that more people will be retrenched in the 2019/20 financial year than before – particularly in the fields of construction, household, and agriculture – due to the impact of 4IR.
However, Marius Croucamp of the Solidarity Institute for Strategic Labour Affairs (SISLA) argued that automation and AI can’t bear the brunt of the blame for job losses in South Africa.
Instead, he argued that retrenchments on such a large scale are the symptom of a sick economy.
“The biggest reason for this perturbing trend is not mentioned in the report at all,” said Croucamp.
“The increase in retrenchments is due to poor economic growth and high costs as a result of the government’s ideological policies, and not actually because of the 4IR.”
Croucamp added that while Morajane did allude to legislation and policies having a role in job loss figures, the emphasis placed on this within the report was insufficient.
Poor economic transformation
In September, the Solidarity Research Institute (SRI) presented a report which investigated economic transformation in South Africa.
Senior researcher Morné Malan concluded that South Africa is doing extremely poorly when it comes to economic freedom.
The World Economic Forum’s International Competitive Index has also documented a sharp decline by the South African economy, which saw the country drop by 32 places from 2007 to 2018.
The World Bank noted an even worse decline on its “ease of doing business” index, which has seen South Africa drop 50 positions since 2008.
“From this, it is clear that South Africa is one of the worst countries in the world when economic freedom is under consideration – especially when it comes to the size of government, the freedom to trade internationally and harsh regulations to control business,” said Malan.
Croucamp argued that this data shows that South Africa has much more to blame for job losses than 4IR.
“To now make the 4IR the scapegoat while government itself is creating an extremely unfavourable environment for economic growth in South Africa is irresponsible and ill-considered,” said Croucamp.
“The time has come for government to act in an accountable way and to abandon its populist policy in the interests of all workers in South Africa. Our economy can no longer afford the ANC’s ideas.”
When it comes to the future of South Africa’s economy, foreign investors have spoken with their money.
A recent report by Bloomberg showed that overseas ownership of South African government debt had fallen to 37% by the end of August, plummeting from as high as 43% in March 2018.
Edwin Gutierrez, head of emerging market sovereign debt at Aberdeen Asset Management, speculated that investors were preempting a Moody’s downgrade of South Africa’s economy to junk status.
If South Africa was to be dropped to junk status by Moody’s, the country would be removed from Citigroup’s World Government Bond Index, and this would force many foreign investors to sell their South African bonds.
“Investors who would be forced sellers in a downgrade, some of them have sold,” said Gutierrez. “Ramaphoria clearly has died.”