DA's false Western Cape job claims

DA MP Geordin Hill-Lewis recently gave a speech in the National Assembly on  about the DA's Western Cape alleged job creation and employment claims. This is an edited version of my response to him. 

DA party leader Mmusi Maimane has repeatedly claimed the DA-run Western Cape is “creating” jobs and has the lowest unemployment rate in the country since 2009. Note he variably refers to the official rate (see below), which made it Limpopo until the last quarter 2018 (Q4: 19.6%; Q3: 18.9% to WC’s 20.4%), and other times like recently the expanded rate so it’s hard to keep track of which one he’s referring to.

Geordin Hill-Lewis did too in did too in his speech to the National Assembly on February 13:

“Where the DA governs, jobs are created. In the 10 years of DA government in the Western Cape (WC), job growth has been triple the next best province. That equals 640 000 new jobs, more than the entire population of Mangaung, in new jobs. Unemployment where we govern is 14% points lower than the rest of the country. Out of all the jobs that were created in the whole country, 53.3% are from the one place where the DA governs.”

Maimane quotes Stats SA’s quarterly labour force surveys and presumably Hill-Lewis did too, he apparently the expanded unemployment rates. Note users must be consistent with their use of the rate and not interchange them as Maimane does. The official (lower) rate is formally used or users must clearly state they’re using the expanded definition.

As Hill-Lewis knows, like other statistical and other organisations around the world, Stats SA uses the ILO’s definition of unemployment which is “persons without work for pay or profit, who are seeking and available to start working for pay or profit in specified reference periods”. It excludes so-called discouraged job-seekers, the rate he apparently used in his speech – “14% points lower” (than what?).

But as non-economists, politicians (his profile says he has an honours degree in politics and economics) and media[1] usually do, they misinterpret and misunderstand economic data – job numbers recorded during the reference week – and from that incorrectly infer what the macro-economy is doing, which is not what these surveys say. In this Politicsweb article I explain the misconceptions.

Let me put it this way: the labour surveys are snapshots of the market at particular points in time like a snapshot of a man standing on the street. The photo doesn’t say how he arrived there (on foot or conveyance or was standing still), where he came from and definitely not where he’s going. It also doesn’t state his condition – fit, unfit and so on. One needs other information to determine this, movie-like, tracking his past (and future) progress around the city on CCTV footage, and make predictions with the available information. 

So it is with the labour surveys – they tell us nothing beyond the bald job numbers about the state of the economy, which we interpret and infer at our own risk. The surveys are from the demand side, not supply side, so for a comprehensive analysis including the drivers of growth and thus job creation we need GDP, manufacturing, export and other data. 

The labour market is in a constant state of flux – “churn” – as employers react to economic conditions hiring and firing, but not immediately, and people enter and leave the job market. The latter include firings, retirement, leaving to study or sabbatical, medical and other personal reasons or simply dropping out. 

Because existing posts are filled from one survey to the next and more people are saying they’re employed, doesn’t mean jobs are being created, although that’s a possibility. The same when the situation is in reverse. 

In South Africa’s case when the economy is and has been in stasis and decline since 2011, in the main, jobs are not being created – there cannot be job creation without economic growth. Or tell me in which remarkable universe matter is created from nothing. 

So it’s highly probable in this environment up (or down) ticks in employment can be ascribed to seasonal fluctuations and existing posts being filled (or waiting to be filled) from one survey quarter to the next. 

The unemployment rate – the percentage of the working age population actively looking for work (the labour absorption rate is another useful but often overlooked metric) – is the best, reliable indicator of the state of employment, not the numbers Hill-Lewis and Maimane misleadingly quote that are open to interpretation because they contain macro-economic lacunae. 

Also, South Africa’s national and provincial rates are among the highest/worst in the world. If the Western Cape were a country it would be 27th at 19.3%, and South Africa 14th at 27.1% (last quarter 2018). So the DA boasting which province (WC) is better is like beggars arguing who is poorer. It’s futile and petty and reveals the base levels of mediocrity to which the country has sunk.

Further, provinces don’t make economic policy and so can’t direct and affect the macro-economy. We’re all hostage to the ANC government’s bad policy, mistakes and ideological traps of the mind and perhaps international factors too, although in South Africa’s case most problems are self-made. All provinces and cities can do is promote their regions to investors which they do like the WC and Wesgro. 

Well-run regional administrations are a plus but investors look at national conditions first and foremost before they commit. This is revealed in the “unprecedented” letter of concern the US, UK and other countries sent President Cyril Ramaphosa – national economic issues are investors’ primary concern. 

I give credit to Wesgro’s investment drives, e.g. obtaining R17.5bn and 6 625 direct and temporary jobs for the 2016/17. But if, say, R2.6m in present values new investment is needed per “new” job, not all of them permanent, for the 640 000 jobs Hill-Lewis says were created since 2009, the WC must have received over a million million rand in new investment, which is preposterous. 

The numbers might be exaggerated but they get the point across: in an overall modest to poor growth environment for the past 20 years, particularly since 2011 when national and provincial (WC) GDP rates dropped consistently, there was very limited real job creation, the “new” jobs he's talking about in the Western Cape. 

Instead, the economy has existing (over)capacity which accounts for most of the current employment. A corollary to that is given the ANC government’s low-growth and development path, the country has had the right number of people employed for its current level of economic development and won’t change until there’s a paradigm shift – I use that word in its correct meaning – in ANC policy, which won’t happen with their delusional and stupid insistence on expropriation without compensation, propping up failing state enterprises, BEE and incompetent corrupt cadre deployment, etc.

Therefore, most – an indeterminate number are new, though – of the “new” jobs were and are, in fact, recycled, existing posts as people left/leave the job market, many retiring, and others including new entrants replace them. 

Note in the Zuma era public sector employment, which is not economically productive, increased significantly from 2.2 million in 2008 to about 2.7 million presently. Hill-Lewis and Maimane don’t say how many WC state workers are included among the 487 000 or 640 000, whichever figure is used, new jobs, which is neither the economically productive work he means nor the DA can claim credit for. 

I dispute his and Maimane's assertion the quarterly upward job fluctuations represent brand new jobs that were never there before on the basis he, and others, are misinterpreting the survey’s figures and intent. So their claim the DA single-handedly is creating work in the province is specious at best and false at worst. But I’m open to persuasion. 

Therefore, to put what I believe is the DA’s one-upmanship to bed once and for all, I asked him to provide credible research (not Africa Check!) and facts that conclusively prove 487 000 to 640 000 (Maimane said 487 000 and he 640 000; which one is accurate?) new jobs, i.e. those that didn’t exist before, were created since 2009 and it was through the DA’s sole efforts notwithstanding the WC being part of a unitary state where national government makes economic policy and all the country’s regions suffer similar economic conditions. 

Note the province has competitive advantages with its natural beauty and related tourism industry, agriculture and as a centre for some financial institutions. So the DA cannot claim credit for that and neither the relative good standards its citizens enjoyed even under ANC provincial and City of Cape Town administrations.

I copied the WC’s Department of Economic Development Beverley Schafer and Wesgro's Tim Harris in case they have information or an opinion to offer. 

Incidentally, in 2015 I wrote to them asking for proof of Alan Winde’s and Harris’ oft-made assertion the alleged skills shortage (there’s no shortage, though) was harming the WC’s economy. Winde’s PA replied their panel of experts would investigate and get back to me. They never did and neither did Wesgro. I couldn’t tell why they needed to investigate when Wesgro is also a research organisation and both must have the information to back such claims. 

A year later Harris and Wesgro’s chief researcher wrote an op-ed in the Cape Argus where they inter alia stated they respond to WC citizens’ queries within 48 hours. A Wesgro officer emailed me following my letter to the Cape Argus about their lack of response but still didn’t provide the information I requested 12 months before. I doubt this request will meet with better success, especially when the data doesn’t exist or is questionable.

Footnote

[1] Africa Check, whose researchers are not experts, didn’t publish my posted comment or email to this cited article. A couple of months ago the chief editor, Anim van Wyk, presumably responding to my comment on Politicsweb about that experience (it was to another matter, farm murders), emailed apologising. She claimed they “overlooked” my post and email – they weren’t published – because they were rushing to deadline. For an organisation purportedly committed to checking facts to overlook a probative opinion on this matter – their expert UCT economics researcher Zaakhir Asmal cautioned them about a similar thing – is damning and again proves my contention the media cannot be relied upon to tell the truth.