I was looking at the manufacturing numbers today with regard to employment in South Africa and they do not depict the real story. I am involved in the manufacturing sector and I have only seen the numbers shrink over the years so when comparing over the last 10 years as a percentage the number as a percentage of those employed in the manufacturing sector has actually increased. South Africa has the highest unemployment in the world so it is something that is always on your mind as there could be unrest in the future which is never good.
This leaves you to assume either the manufacturing industry has grown or the number of people employed over all sectors has dropped which is what has happened here. What does stand out is 9% of the jobs are government jobs yet there are no services so you wonder what jobs these people are actually doing as they are making no difference.
There was a report yesterday which highlighted problems that many may have not considered. The latest population report for South Africa has the total standing at around 63 million and suggest this is a serious thumb suck as no one knows and could be way higher and be out by as much as 10 million or more due to the open borders.
The police force has a reported 88 000 employed which includes civilians numbering around 14 000. The police work on shifts so the entire country will have roughly 25 000 police running 11 000 police stations which makes no sense as I am sure many are not even actively open or you would have 2.2 police per station. The 25 000 for 63 million people is the scary part that stands out as that is one policemen per 2500 civilians with the world average being one policemen per 333. If you looked I would suggest the army would see similar numbers with a depleted force.
The police figured would directly impact the crime figures so it is no surprise to see a lawless society. The private security sector employees over 600 000 personnel so one can see who is providing law and order nationally and it is not the police force.
Back to manufacturing as industries like the automotive industry are in decline world wide and not just South Africa. The decline is gradual, but over a decade is actually moving at an alarming rate.
Economies that are doing well tend to have a strong manufacturing back bone so if this sector is shrinking then long term there are serious problems which would include a higher unemployment rate.
South Africa's manufacturing problems increased through government reforms back in 1995. The government lowered import tariffs on manufactured goods which countries like China took advantage of at the expense of local manufacturers. Within 10 years the economy changed form a manufacturing base to a service base like financial and retail.
The manufacturing sector accounted for around 25% of SA's GDP and by 2010 was sitting at around 15% and today around 10%. This is a 60 percent loss within 30 years and no matter what changes happen this is not coming back and has been lost for good.
The automotive sector is always a good indicator of where the economy is heading as it reveals so much especially as an employer. The SA Government plan is to have these special trade zones which offers cheaper taxes and companies exempt from BEE initiatives plus local union rules.
Toyota have a new steel press in one such zone supplying 40% of their needs yet the steel is all imported and not locally supplied. This was previously imported from Toyota in Thailand which now with this new steel press employs 250 workers. All the other components for the vehicles are imported as the numbers do not justify manufacturers investing and setting up a plant when those components are made elsewhere cheaper. The jobs have just vanished as it is no longer financially viable to use SA due to the costs of employees and unreliable carbon (coal) generated electricity.
The SA government has set a target of manufacturing 60 % of all car components locally and they will be lucky to achieve 20% due to the import tariffs being too cheap. The unemployment numbers will continue to rise due to the government not protecting what manufacturers still remain and those numbers will slowly decrease leaving very little. The government has sat on their hands for 30 years so do not expect this to change due to not understanding the basic economics.