There is little hope that South Africa’s manufacturing, mining, electricity, construction and transport sectors will create jobs unless commodity prices strengthen, economist Mike Schüssler asserted on Tuesday.

Speaking at an event hosted by union Uasa, he stated that new opportunities would have to be found to resolve the country’s economic and unemployment crisis.

Schüssler noted that South Africa, as a major commodity exporter, was in a much slower growth environment owing to the downturn in the global commodity markets.

He pointed out that other commodity producers such as Brazil and Russia were in recession and that South Africa’s economic growth was most likely to remain weak, if not negative, in the next few years.

“Commodity prices overall have declined by over 40% from their peak in US dollars, yet there is no long-term recovery in sight as overproduction still haunts products from steel to oil,” he said.

The mining and manufacturing industries in South Africa were impacted on the hardest by the downturn in the commodity market – with employment levels in the manufacturing sector matching those of 1971.

Schüssler noted that this meant that South Africa’s manufacturing sector now employed fewer people than at any time in the last 45 years.

Mining had fared a little better, but acted as the main transmitter of weaker commodity prices into the South African economy.

“This impacts not only employees and firms in mining, but also many other sectors, like manufacturing. The mining industry contributed to over R204-billion worth of goods and R188-billion in services to the economy in 2015.”

Schüssler warned that mines would cut back on expenditure in both real and nominal terms and were also in the process of cutting their wage bills.

He pointed out that the impact would mainly be felt in mining towns and in the cities that serviced the mining industry.

He added that the electricity sector was selling less electricity and, with big capital projects under way, would have to implement price increases.

“The electricity sector may well become a much smaller producer than its capital planners forecast. The full impact on construction will take a little longer as projects first get delayed and then stop altogether,” he noted.

Schüssler said South Africa’s high unemployment rate would probably worsen.
“Strikes, which were very prevalent in the last upswing, are likely to become fewer as employees scramble to keep their jobs,” he said.