Jobs haemorrhage in Nam

Jo-Maré Duddy – Around 40% of Namibia’s workforce currently is unemployed following years of negative or poor economic growth, exacerbated by the impact of the Covid-19 pandemic.

The vast majority of analysts contacted by Market Watch agrees that about 40% of the workforce is jobless, up some seven percentage points from the last labour force survey conducted by the Namibia Statistics Agency (NSA) two years ago.

“We could easily see the number of unemployed in the region of 430 000 people, given the unemployment rate was around 33.4% in 2018, the [subsequent] increase in unemployment and the increase in the working-age population,” says IJG Securities.

This is nearly 70 000 more than in 2018. The average household in Namibia has four people, implying that about 1.7 million people could be affected by an unemployment rate of 40%.

The ministry of labour, industrial relations and employment creation has said 12 198 people lost their jobs last year. A total of 896 employers had to let staff go. Of these 8 803 people were retrenched “due to economic reasons” and 2 842 to “Covid-19 related reasons”, according to the ministry.

“Job creation prospects are very bleak for an economy known to have a jobless growth,” says Dr Omu Kakujaha-Matundu, a senior lecturer in economics at the University of Namibia (Unam).

A survey conducted last year by the Economic Policy Research Association (EPRA) found that 63% of businesses believe unemployment will increase substantially over the next five years.

‘LIMITED’

According to IJG, some job creation might be seen in the agriculture sector. “However, this is unlikely to offset the increase in unemployment due to the fall in tourism.”

Simonis Storm (SS) says job creation prospects are limited and depends on policy.

Government’s procurement directive and the recently started “Buy local, grow Namibia” initiative can help create employment, the analysts say.

“Government and public enterprises hold significant procurement power that should be used to grow and diversify Namibia’s business landscape rather than focusing on the ‘cheapest’ bid,” SS says.

It is also in the self-interest of the private sector to support local producers since it will create job opportunities, income and hence demand for their own goods and services, the analysts point out.

SS says the lack of fiscal space to embark on a significant stimulus package calls for a focussed re-prioritisation of expenditure that can yield maximum economic impacts.

“A shift towards investment in social infrastructure, such as education and health facilities, and the creation of an enabling environment for housing opportunities combined with a strong preference for genuine Namibian construction businesses would not only reverse the downward trend of the sector, but provide much needed jobs in particular for low-skilled workers. This in turn will support construction-related manufacturing activities such as cement production, metal fabrication, etc.”

LABOUR UNREST

Less disposable income adding fuel to consumers’ financial fire is likely to heap union pressure on employers, analysts believe.

According to Cirrus Securities, the closure, downscaling and restricting of many corporate last year, likely to continue in 2021, caused a “dramatic” fall in average household incomes. There are “no immediate signs of material recovery and re-employment visible over the next few years”, the analysts say.

“Employees are struggling to feed their families and extended families who are reeling under the economic pressure and employers are struggling with meeting the bottom-line,” Kakujaha-Matundu says.

Unions and employers at loggerheads might be to the detriment of both, he says, adding: “An honest conversation needs to happen among organised labour, employers and government.”

IJG says huge wage increases are unlikely this year as inflation is still very low and company profits remain under pressure. “This could trigger a knee-jerk reaction by labour unions who might initiate industrial action to force employers’ hands.”

SS also expects increased union action. “Organised labour will be under pressure to perform especially in an environment where companies will have to lay off workers. However, their negotiating power will be weakened if the economic and business environment remain depressed,” the analysts say.