UNEMPLOYMENT

We have a crisis. There is no other term to describe it. 9 milion people unemployed is actually too big to blog about, too indescribable for words and could simply be imagined as a sea of despair.

You and I get out of bed every morning with work to attend to. For stay-at-home moms, it’s getting kids nourished and ready for school. For businessmen, it’s off to work and the stress of the day. Whatever it is, it lends meaning to life and creates the routine so many of us need to live and be ourselves.

What of those who do not enjoy employment? I would put to you, they:

  • Have no or little money.
  • Have little that it is required to be bought, starting with food.
  • Have no or little dignity.

The first “have not’s” are so obvious that they need no describing and frankly, I’m not in a position to even try; the Afrikaans word “ellende” comes to mind, that sense of utter desperation. But as regards dignity, let me try a little to give flesh to its absence. I can remember when the homeloan business was shut down in Nedbank and the sales force found itself being retrenched. Every time I met one of my team, my message was: “Don’t let anyone take away your dignity; it belongs to you and only you can give it away.” It truly was the lasting thought on my mind as I too departed from the company that had employed me for 20 years; that retrenchment programme was anathema to me and not being retrenched myself, I resigned to pursue my own origination business. The rest is history, so they say.

It seems to me that the first thing unemployment depletes is dignity. How do you explain to your family that tonight there is no food on the table? With whom and how do you share what little you may have? How do you pay your debts as little as they may be in the scheme of things? The mind boggles at the reality and those of you reading this who have experienced the chilling wind of unemployment, you would be able to best describe the desperation into which you plunge. It must be incredibly difficult to avoid the indignity of your circumstances. Statistically, over 9m (and growing) people face this debilitation every day. I’ll never forget getting to know my people in the meat business – the first time I had worked with who we term as “labour”. I learnt they were wonderful people with hopes and dreams just like mine – a brighter future, a home, education for their kids. No airs and graces just an exceptional work ethic every day under trying circumstances. I tried many times to enable some of them to lift their circumstances and become entrepreneurs. In the meat business that’s fairly easy, all kinds of offal, stewing bones, offcuts and over-stock exists and the market for its sale was right where they lived. Very few ever saw the vision of beginning small and possibly growing a significant business though some went off into Legal work and the Metro police so good for them. We talked about it and encouraged it, but little seemed to bear significant fruit. One thing I think I learned then is that poverty constricts the poor and their inner belief of potential is strangled by constant negative feedback – I battle for the right words, but knowing some people come out of poverty in rags-to-riches stories, my sense is that we know them because they are so exceptional. On the other hand, the masses of poverty-stricken individuals and families have not enough dignity to rise beyond simply struggling to stay alive themselves every day. I often say “I have never been poor” implying that I just have no idea what it’s like. Life was never rich and everything our family had and now has, has been worked hard for and I’m sure most of you identify with that upbringing. But in it was the power of dignity that knew it could reach for a dream and have a probability of success, whatever that means to each of us.

As I drive past Atterigeville and to Cape Town from time to time, I am aware of the shattered dreams of many of our people. The government has not provided the promise and the land grabs have managed only to give 3X3 square meters shelter with not even a cabbage able to be grown in the yard. Abject poverty is a blight and disgrace upon our land and, indeed, the “struggle” which fought for so much more than this, has really failed them. And demagogues and populists only continue to crash the economy into its base elements along socialist lines and towards a possible failed state. I’ve just read Fighting for the Dream by RW Johnson and have started People’s War by Anthea Jeffery – both books speak to the black hole of National Democratic Revolution philosophy. Radical change is needed for radical unemployment; the NDR is not that kind of change.

This is not a rant but just a record of the position we all know we’re in coupled with some personal insights with which you’re welcome to disagree. But on the other hand, for all I seem to see in even my few travels, there is obviously a huge informal sector that I simply don’t know. Every day men and women are raising themselves from abject poverty with the guts and determination to eke out a living for themselves and their families. As economist and banker, I was dumbfounded by an article by GG Alcock about the Informal sector of our economy. What also struck me is that we think about people earning R30 per day just to stay alive but he knows “Vetkoek” ladies making R6000 per day literally on the streets. It is not taxable income I’m sure but she feeds another 5 people and their families and no doubt does well for herself. What’s also impressive here is the incredibly hard work of this kitchen and sales force; I couldn’t make 12 koeksisters a day never mind 6000 vetkoeks. Strength to your arm Lady, whoever you are, you make us in the formal sector proud!

Enjoy the article… and then an optimistic closing comment.

 

SHATTERING THE MYTH OF HIGH UNEMPLOYMENT RATE: WHY 29% CLOSER TO 12%

19th August 2019 by Jackie Cameron

High unemployment is often quoted as the reason for emigration from South Africa. But, look beneath the official statistics and you will see a vibrant economy built by tens of thousands of small business operators and entrepreneurs. This is the message that GG Alcock, who calls himself a white Zulu after being brought up in a rural community, is bringing home to economists. His number-crunching makes for fascinating reading. Looking at the details of the street vendors and small-time landlords, the incomes being generated are fairly impressive – and certainly not just subsistence living. GG Alcock reckons it is time to take a fresh look at the South African economy and realise that the statistics being bandied about cannot be true. – Jackie Cameron

 

ANGINAM’SEBENZI, NGIYASEBENZA. I DON’T HAVE A JOB, I WORK!

By GG Alcock*

In the crescendo of shock and horror about unemployment of 29% I must disagree with these numbers.

These numbers should be prefaced by the word “formal” unemployment.

GG Alcock pictured centre
GG Alcock pictured centre. (Source: Facebook) 

I have written about the huge scale of informal businesses at some length in my books Kasinomics and Kasinomic Revolution. There are a multitude of informal and kasi businesses – some small, some pretty large – which are not measured in unemployment stats.

This is for a few reasons why they are not considered:

  1. They are not measured by formal research;
  2. They are considered survivalist or subsistence business people who would at the drop of a hat accept a formal job if they could have one (which is total bull);
  3. They do not consider themselves employed as they do not have a payslip or work for a boss which defines what a job is, they say “anginamsebenzi, ngiyasebenza”;
  4. They operate in an informal and largely invisible economy, well invisible to the formal world. The former Minister of Small Business even said “we need to create more entrepreneurs in the township”. Astounding there are tens of thousands of entrepreneurs and micro businesses out there in the informal and kasi sectors. 

In a recent Kyknet show on the informal economy and youth unemployment the programme asked me to assist them to interview some young entrepreneurs. One I connected them with was a lady from Limpopo who sells vetkoek in downtown Joburg. This young 24-year-old sells 6,000 vetkoek a day for R1 each and employs 5 staff, one her brother. She turned to vetkoek selling because she could not find a formal job. She definitely was not measured as employed in the stats nor were her 5 staff.

What about income generating activities, are these viewed as jobs? I wrote in Kasinomic Revolution about a gogo who earns around R1,600 a month in old age pension. Yet she rents out a shisanyama and a hair salon in front of her little house for R1,500 each and three backrooms for R1,200, R900 and R900. So, she earns an additional R6,000 a month from rental. Let’s briefly look at the kasi rental sector. The immigrant spaza sector rent their stores from South Africans, paying between R2,500 to R25,000 for the store rental depending on the size. I estimated the rental income to South Africans is in the vicinity of R30bn a year. That’s a lot of good money being earned. Pity this is not featured in xenophobic rants about immigrants taking jobs.

And backroom rental? Practically every single township home has a back room, a garage-sized room rented or occupied by extended family and often a mix of both. I estimated that over and above the rental of spazas, backroom residential rental brings in another R20bn a year.

So are the more than 20,000 hair salon owners employed or are their stylists who in kasi style rent stations from the salon owner in a gig economy type arrangement. They are not employed but each stylist who rents a station in the salon is self-employed making anything from R5,000 to R15,000 a month in styling, nails, extensions etc.

What about the fast food sector in the townships, what I call kasi kos with 50,000 outlets selling kotas, amaplati, inhloko, isibindi, isishebo, burgers, chicken dust, mogodu. A sector employing 200,000 odd staff “informally” and turning over in excess of R85bn a year. Are they all unemployed?

Or the muti sector, inyangas and sangomas dispensing herbal plant based concoctions estimated in 2004 to be worth R3bn a year and employing 150,000 plus herbalists.

What about the school mamas, the school tuckshops of the townships, I wrote in Kasinomic Revolution of a lady in Thembisa who has been selling food and snacks at the same school for 26 years, earning R6,000 a month in profits. She has put her two kids through university and her husband has been unemployed the whole time. There are 12,000 odd township schools each with 5-8 school mamas, if each only earn R3,000 a month (the minimum wage for domestics) then that is a sector worth easily R2bn a year in incomes. But these school mamas are unemployed, aren’t they?

I am not even going to mention the auto sector with its kasi mechanics, panel beating, car washes etc.; nor the tavern sector; nor the township building and support sectors such as electricians, plumbers, builders, tilers; nor the internet cafes or goat farmers; I can go on.

We are NEVER going to create a million jobs in the formal sector no matter how many electoral manifestos or government promises are made in this regard. Initiatives like the YES programme are designed to encourage mentorship, internship and job learnership opportunities in the formal sector which is shedding jobs. Why would you get a job shadowing or intern opportunity at Standard Bank while they are closing branches and retrenching staff as an example.

The informal sector is remarkably similar to the gig economy. While governments and municipalities are trying to regulate or limit AirBnB, Uber etc these are the economies of the future which should be supported (and taxed) as the future employers and economies.

The informal sector is where the opportunity is, we need to bring the informal economy into the formal economy, not by formalising but by creating fostering and growth environments.

My simple starting point and three steps to addressing formal unemployment is about growing and giving security to the informal sector so that it can grow, so that it can formalise, so that the participants have security and thus invest more into their businesses, and so that there is an incentive for this economic sector to pay rent, tax, PAYE etc:

  1. Give security of tenure through a PTO (permission to occupy) type mechanic, to informal traders and in exchange charge rental. An astonishing example of this is the Warwick Street Market in Durban with work done by the Asiye Etafuleni organisationin cooperation with the municipality.
  2. Venture capital type credit for small businesses allowing them to expand; get stock and grow. Utilising different means to measure credit worthiness and profitability to existing models. As an example, the vetkoek seller I described purchases 50 x 12.5kg bags of flour a week from a local wholesaler. It is very easy to measure these input costs and do a simple extrapolation to calculate margins and as such valuate these businesses for credit.
  3. BEE type model for immigrant traders. These traders are going nowhere, let’s bring them into the economy and let them add value. This simple mechanic would offer, business licences, residency etc in exchange for the outlet following a BEE type code earning points for e.g. pay VAT and Tax, pay rental to a South African at a set rental rate, employ x amount of South African staff,  procure security, transport services etc from a South African small business. 

I reckon real unemployment i.e. where the person has no income generating opportunity or income for any form of permanent work, is probably closer to 12%. Prove me wrong if you can?

Instead of banging our heads against the formal sector wall doing the same thing over and over expecting a different result why don’t we look for solutions which assist the largely informal Kasinomic sector? The economy does not belong only to the formal sector. Prepare for a Kasinomic Revolution.

*GG Alcock has been at times a shebeen owner, political activist, community worker and African adventurer, and more recently the founder of Minanawe Marketing, a leading marketing agency in the mass market

If you don’t know this man as I’m embarrassed to admit myself, he is a breath of crystal-fresh air; the kind of almost-unique man who has taken the trouble, like Johnny Clegg, to live with and understand the majority of our population. Imagine [a word I use often], an education system to have given these brilliant entrepreneurs a head start in life. Imagine mentors taking these businesses to great heights starting with a dream of what could be and then teaching what is necessary to finance and build a business out of its seams. But even while we allow our imagination to run, what these people do not need to do is steal for a living; they have self-induced motivation and dignity pouring out of them. They are part of the future of this State and not a product of it corruption and social torture. How do you know that maybe they’re the homeowners of the future or, at least, that they’re growing an educated and driven population of kids who could be.

The question then remains, “What about me [and you]?” As I often say, “Any idiot can tell me the problem! I need people who can tell me the solution!” Look at my first few passages to this blog. Were you nodding your head and agreeing with me as we slipped into depression and “I told you so” together? Or, are you part of the solution? Finding answers, employing people for the best salary you can pay, talking to them courteously and meaningfully to lift their spirits into dignity and possibility thinking. Or, are you or I just miserable. I have a dear friend who is determined to sell his house and move to Scotland to be close to his kids who have moved offshore. But instead of bitching constantly about the country, he employed Alex and then helped fund him to get to and start a subsistence farm back in Malawi. Now he has employed Sam and I bet he’ll help him along the way as well. Who knows what my friend’s “hustle while you wait” positive attitude may mean to these two men who are fighting to lift themselves from economic refugee status to something better?

Hope you and I “get my drift” and do as much as we moan while we’re blessed with health and life to be ourselves and so much more.

Yours in Property.

Jack Trevena

Jack Trevena

With over 30 years of experience in the banking and home loan industry, my hope it is share what I have learnt over the years with my blogging community, inspire conversation around the subject and in the process discover unique insights into this ever changing environment.
Jack Trevena

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