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SA’s unemployment numbers don’t take informal sector into account – GG Alcock

GG Alcock joined the BizNews Power Hour, on the day after the unemployment data for South Africa were released. The figures showed horrific numbers, but Alcock provides some context on the numbers – and the way they’re put together. The author of “Kasinomics: African Informal Economies and the People Who Inhabit Them” weighs in on the world-leading unemployment figures, noting that “we have to define how we measure unemployment. One of the big problems with the numbers that we see is that it says unemployment, not formal unemployment.” – Jarryd Neves

GG Alcock on SA’s unemployment figures:

First of all, we have to define how we measure [it]. One of the big problems with the numbers that we see is that it says unemployment – it doesn’t say formal unemployment. Actually, it needs to say that because anything outside of someone who earns a payslip is, in essence, not measured by those numbers. If you don’t have a pay slip, not formally employed [and] in the informal sector, this is not measured. While I think it’s a tragedy and it’s terrible that unemployment is so high, it’s not a true reflection. I must add other forms of income generating activities – and simple one that I’ve referred to in the past is rental. Primarily backroom rental, which is a R20 billion a year sector in the townships and certain rural areas. That’s money that people are earning who may be formally unemployed (and informally unemployed) but are still earning income through other activities. That is not measured in our numbers.

On Kasinomics:

The underlying principle of it is that there’s a massive economy that sits in the informal sector. I call it kasinomics, because I don’t like the concept of “informal” – it implies unsophisticated, small scale, low tech, disorganised which, of course, it is not. The term kasinomics refers to the township, but purely as a term to move away from the informal economy. The concept of kasinomics is, in essence, that within our inner cities, rural areas, townships and even around the suburbs, there’s a huge informal economy – that is not only huge in terms of large numbers of people and small businesses, but huge amounts of turnover that many of these businesses are turning over.

The spaza sectors is a R150 billion sector with 100,000 outlets. The fast food sector is a R90bn, 50,000 outlet sector. The hair salon sector [is] R10bn, the muti sector (traditional herbal medicine) is a R19bn sector, with 150,000 people employed in it. The taxi sector [with] 250,000 taxis [is a] R50bn a year sector. There’s others like the auto sector – panel beaters, mechanics etc. It’s about 80,000 people. Then there’s the rental sector. Backroom rental is worth about R20bn a year. over and above the residential back from rental, the spaza sector that I mentioned primarily rents. Add all of this up and you’ve got a fairly substantial sector.

On what the unemployment figure is, with this taken into account:

I’m saying it’s closer to 15%, which is still unacceptable. I’m really using that as a base of when I did the more accurate calculations [which] was around 10% to 12%.

If I go and ask a social grant recipient, “are you an employed?” and they answer, “no, I earn a social grant.” I don’t say, “do you do anything else apart from a social grant? Do you sit at home and look after your kids?” She says, “oh no, what I also do is sell vegetables. I also rent a back room.” We do not measure this. The gig economy is a good example worldwide, we have to define what a job is, differently and what the income is. We don’t measure it that way. We have a society that considers a job as a payslip. There are a number of factors. The problem with this, first of all, is that it puts us all in a deep, dark depression – which is not necessary. Secondly, we start looking at interventions wrongly.

We don’t look at interventions that support this informal sector or people who have multiple jobs. So when we look at solutions for this huge unemployment issue, we define what a job is [wrongly] and then we define what the solution is [wrongly]. This is a massive kind of wheel we’re stuck in.

Read more:

  • GG Alcock: It’s not about poverty or unemployment – stop the hand wringing and still the violins 
  • ‘Unapologetic civil society power will grow from riots’ – GG Alcock
  • Third World Child GG Alcock: Common sense optimism about SA

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