After watching one of the clips in this interview, I’ve really seen it all. In recent weeks, StatsSA has released one survey (based on household interviews) which concluded 509 000 jobs were created in SA last year. The same agency published another survey (based on responses from businesses) which said the number was actually 39 000. Now StatsSA boss Pali Lehohla says both surveys are correct. In our interview today on CNBC Power Lunch, straight shooting Loane Sharp of Adcorp offered the kind of response you’d expect. Less predictable is his proposal of how to address a platinum sector strike now into its 12th week. – AH
ALEC HOGG: Welcome back to Power Lunch. I know many people watch us and don’t turn up the volume. Well, if you have a chance now, just turn that volume up. Turn it up a little bit, because you’re going to like this. According to Adcorp’s employment index, the economy shed just about forty-eight-thousand jobs during March. Loan Sharpe, Labour Economist at Adcorp, joins us for more on this. We have a couple of debates going on at the moment Loane, but let’s just start with the forty-eight-thousand jobs. That’s more from your numbers, than one of the Stats SA analysis said were created for the whole of last year.
LOANE SHARP: Yes, that’s right. Stats SA says that last year five-hundred-and-seven-thousand jobs were created in 2013 in the formal sector.
ALEC HOGG: We know that that’s not great, but they had another one where they interviewed companies who said thirty-nine-thousand.
LOANE SHARP: Thirty-nine-thousand, so Stats SA doesn’t have a coherent number within themselves for the same formal sector of the economy. Just is just completely ridiculous. We find ourselves in a situation now that Argentinian banks found themselves a few years ago, when there was just no credibility to government inflation figures, and the banks got together and started producing their own. I think that’s what’s emerging in South Africa. More and more employment statistics are contested terrain. People don’t take Stats SA’s figures seriously, except for those who are in service of Stats SA. I welcome the debate. I think it’s a critically important thing. We’re going to hear from Pali Lehohla in just a moment. We have a clip with him. Someone else from the private sector, Saijil Singh from Coface said that he also disagrees with both you and Stats SA. Let’s have a look at that report now – or rather, a clip – see what he had to say, and perhaps you can respond.
SAIJIL SINGH: We’re very stats focused. South Africa as a country, as an economy, and as a people are very concerned with certain numbers for example over 25 percent, over 26 percent unemployed. That’s not true. That is based on true statistical data form the Revenue Services with minor adjustments for estimations, but it’s talking about tax-paying people. What about the very small entrepreneurs in rural areas starting up a little business of his own. Is he technically unemployed? The stats would say it is.
ALEC HOGG: So he reckons the unemployment number is 16 percent, and that the stats are all wrong. Does he have a point?
LOANE SHARP: Yes, he definitely has a point. At Adcorp, we come to 11.3 percent as the unemployment rate. If you include all the informal sector workers who were not counted properly by Stats SA… Just to give you a sense…
ALEC HOGG: Government or surely, Zuma should listen to this and trumpet it from the rooftops.
LOANE SHARP: You would think so.
ALEC HOGG: 11.3 versus 24 is a big difference.
LOANE SHARP: Remember, there’s a whole unemployment industry now. There are academics, government officials, and NGO’s who have built a whole industry around the unemployment problem. The entire social grants business, which is a multi-billion Rand per year business, depends critically on the assumption we have around unemployment. Just to give you a sense of the discrepancies, SARS tells us that for the 2013 fiscal year there were 15.2 million taxpayers during the year. Stats SA tells us that there were 10.1 million employees over that same period. This is a tremendous discrepancy. It seems like Adcorp is the only critic of Stats SA, but we know that the National Treasury, the Minister of Finance, and other important branches of government totally discredit and disregard Stats SA’s figures.
ALEC HOGG: Well, let’s see what Stats SA itself has to say. Pali Lehohla, Statistician-General – so, the big boss there at Statistics South Africa – insists that his numbers are correct. This is what he had to say to us:
PALI LEHOHLA: You have to believe in both. When you look at the structure of the economy, you have to use establishment information. When you go to a household, where you are employed is not always as clear. When you ask a person ‘who is your employer’ for example, people working on the mines – outsourced as cleaners on the mines – will say they’re working for a mining company, when actually, they are in cleaning services. This is the difference. However, when you go to the establishment, which is a mine, it will tell you how many people it employs on the mine, so the two are perfectly correct.
ALEC HOGG: I don’t know. There’s all kinds of ‘speak’ and I suppose there’s a special ‘Stat’s speak’. He was however, referring to the fact that there were the two reports that came out of Stats SA – the household survey, which showed 509-thousand jobs were created last year (which the politicians love, of course), and then the survey that came from the companies, which said 39-thousand jobs were created. Is he making sense to you?
LOANE SHARP: Well, there’s a big contest between how big the formal sector is and how the big the informal sector is. We know from Stats SA data, that the formal sector is in decline. We don’t know, from Stats SA or anyone else, including Adcorp, how big the informal sector is. There are suggestions from the business trust and others, that the number of small businesses has been undercounted by about 5.6 million people. There are analyses from Bank of America – Merrill Lynch – where they took aerial photography of business communities in informal settlements and pieced together a picture that showed informal sector activity was about 30 percent more than Stats SA appreciates. Stats SA, using a German and Canadian-style methodology, is not getting to grips with the nature of the South African economy, which is overwhelmingly and increasingly informal.
ALEC HOGG: But this also has relevance for the way this country is governed. If you think we have organised labour, part of the government making decisions, and yet disorganised labour if you like or informal labour, would be much larger if what you’re telling us now is accurate, than those employed in the formal sector.
LOANE SHARP: Mining unionisation is 78 percent of the workforce and if you put mining out of the equation, for the rest of the private sector, unionisation is only 12 percent. Unions don’t have nearly the influence in the national workforce in general, that they do in the mining or public sectors where they are dominant.
ALEC HOGG: Or in government. You’ve mentioned mining. You have something on the platinum strike.
LOANE SHARP: Yes, I think management has been terribly weak. They should extend their litigation against the trade unions – AMCU, in particular – for loss of earnings due to work intimidation etcetera. They should join in that litigation with CCMA and the Minister of Labour for failing in their official legal duty of promoting labour peace. They should stop giving back pay to workers who return from strike and no doubt, a deal will emerge in the platinum sector where the platinum producers give workers back pay for these three months. Why would a worker lose out on R5.6bn collectively in wages if they didn’t feel that there was some prospect – historically appropriate and correct – that the mines would reimburse them for the money spent out of work?
ALEC HOGG: They shouldn’t get that. If you want to go on strike, you’re not going to be paid. We won’t roll over as we always have.
LOANE SHARP: Exactly. I think it’s really for the mines to be strong at this point. Here again, we deal with government interference. We have government interfering at every level of these negotiations. The CCMA is not an honest broker. We’ve seen that in the criticisms the Chamber of Mines have made of the CCMA.
ALEC HOGG: Did Elize Strydom tell the truth?
LOANE SHARP: Yes, she did – absolutely.
ALEC HOGG: So why does everybody dissociate themselves from her?
LOANE SHARP: Well, because business in general doesn’t want to be seen to be criticising government, and BUSA probably is more politically attuned than its individual business members are. BUSA is a political flock. It doesn’t represent businesses’ attitudes towards government and government action.
ALEC HOGG: Then what’s the point?
LOANE SHARP: I think that BUSA has totally lost relevance, and I think that’s why we’re seeing individual action from Amplats, Impala, and Lonmin, because BUSA has left them out in the cold. BUSA is deep in government’s pocket, that it won’t present any adverse impression to government.
ALEC HOGG: How can you say these things when we don’t hear them from anyone else? You hear them whispered. You hear them being spoken of quietly, but not publicly in the way you do.
LOANE SHARP: Yes, I think Adcorp gives me a wonderful platform and Richard Pike (his CEO) is really brave to let me out on the airwaves. Our primary intention is to draw attention to the crisis of unemployment in South Africa because we’re in the business of employment. In the process, many other things become related, for example government interference in the labour market and government’s connection with trade unions. I think many people think these things. I don’t think I’m saying anything that… To someone with common sense, it’s rational.
ALEC HOGG: And logical. That was Loane Sharp.
