Alan Winde blames Trump for job losses. Is he right?

Alan Winde has attributed part of the province’s loss of 24,000 jobs in the most recent quarter to reductions in United States development assistance. \

While the timing and sectoral concentration of the cuts may encourage this sort of superficial scapegoating, foreign aid cuts accounts for only a limited share of the overall decline. Support for South Africa under the President’s Emergency Plan for AIDS Relief has averaged more than $400 million a year, or roughly 7.5 billion rand. The curtailment followed disagreements between the two governments over South Africa’s foreign-policy positions, including its relations with Iran.

These programmes have financed or sustained approximately 15,000 positions in health care, administration and research nationwide, and the Western Cape contains a disproportionate share of the country’s medical research universities, clinical-trial infrastructure and health-related non-governmental organisations. The resulting contraction was therefore concentrated in the community and social services sector. When disbursements were scaled back, several programmes reduced staff or ceased operations, but this did not encompass the entire 15 000 job cluster, nor can it really account for the bulk of the 34 000 jobs lost.

More to the point, the Province hasn’t given us any breakdown of the actual sectors were jobs were lost – instead they simply point imprecisely to the number of jobs “at risk” in the relevant sectors, which doesn’t actually tell us where jobs have been lost.

Many such job losses are seasonal, and the labour economy naturally ebbs and flows over the course of the year; and the Western Cape remains, despite our best efforts, tethered to the broader South African economy, which is fairly anaemic as it is. The quarterly fall in the Western Cape formed part of a national decline of 345,000 jobs, and on a year-on-year basis the province recorded a net increase of 22,000 positions, the present quarter notwithstanding. Our unemployment rate stands at 19.6 per cent, the lowest of any province, though still well outside of healthy bounds.

Attempts to reassess the accounting of this state of affairs by optimists in informal sector economics such as GG Alcock have faced criticism on this site for misreading the job survey methodology, which already accounts for the employment estimates made by him which, by redupicating surveys within the informally employed, reduce unemployment estimates to 12%. In reality, informal employment is assessed and counted in existing labour force surveys.

Provincial budgets depend overwhelmingly (97%) on transfers from the national treasury. The National Treasury reduced the Western Cape’s equitable share by 6.7 billion rand over the medium term as part of a broader fiscal-consolidation exercise. Because health and education absorb most provincial expenditure, the cut translated into hiring freezes and the non-renewal of fixed-term contracts in public hospitals and schools.

Central wage agreements for the public service were not accompanied by corresponding transfers to provinces. The Western Cape faced an unfunded liability exceeding 1.1 billion rand and responded by reducing headcount and temporary posts.First-quarter employment figures are also affected by the normal unwinding of seasonal positions in retail, tourism and hospitality. Over the longer term, South Africa’s annual growth rate has remained below 1 per cent for a decade, constrained by persistent shortcomings in logistics, water supply and the formal labour market.

The withdrawal of American assistance produced a measurable reduction in employment within specific health and research activities. The larger part of the recent job losses, however, stems from lower national transfers to provinces, unfunded wage obligations and the slow expansion of the South African economy.