The One Million Jobs That Never Were -- South Africa's Employment Dilemma In Agriculture

One can argue that the hope for an additional million jobs in agriculture is misplaced, and policy has put unrealistic and undue pressure on agriculture.

13/04/2017 03:51 SAST | Updated 13/04/2017 03:51 SAST
Siphiwe Sibeko/ Reuters

The sixth chapter of the National Development Plan (NDP) – which sets out a vision of creating an integrated and inclusive rural economy – presented a very ambitious target of how the agricultural sector can create an additional one million jobs. Is this policy target realistic OR is it "optimism taken a tad too far"? As the African National Congress (ANC) pontificated on how agriculture will become a key job-creating sector, questions have remained over how it was going to be possible, given that agricultural employment numbers were already set on a long-term downward trend since the late 1960's.

Research by Dr Frikkie Liebenberg at the University of Pretoria showed that the sector was actually losing jobs, with formal regular and seasonal agricultural employment at a record low – 624,000 jobs at the time he wrote his article in 2011. This is almost a third of the sector's employment figures in the 1960's. Against this background, the "one million more jobs" narrative has been unconvincing for four fundamental reasons. Firstly, as pointed out by the Bureau for Food and Agricultural Policy (BFAP), a number of farm-level factors are underpinning the terminal long-term downward trend in employment, and these include mechanisation and improved productivity.

This has been widely attributed to a naturally occurring "optimisation" phenomenon that has been hastened by the deregulation of agricultural markets, and reinforced by the South African agricultural sector's quest to attain global competitiveness. Secondly, despite agricultural GDP growing from R21 billion in 1994 to R83 billion in 2015, the sector's standing in the broader economy has, however, diminished over the past five decades. In the last 20 years, agriculture's share of the economy had declined from over 3 percent in 1994, to current levels of around 2,4 percent. While agricultural sector's GDP growth was matched by a growth in agricultural exports, the sector's share of overall exports declined from a third in the 1970's, to less than 10 percent in the 1990's, to between 4 percent and 6 percent over the past five years.

Thus, as the sector grew in terms of GDP and exports, it has employed less people; and this labour has leaked out of agriculture to other sectors of the economy. Thirdly, and related to the first point, is the recently proposed minimum wage of R3,500 per month, to be implemented in 2018. On average, 89 percent of agricultural sector employment is either semi-skilled or unskilled labour, and the latter segment of the labour-force is the targeted beneficiary of the minimum wage policy. However, despite its moral imperative, the minimum wage will inadvertently act as a restriction against farmers hiring semi- and unskilled labour. With all its good intentions, the minimum wage will likely lead to a decline in employment opportunities for the 90 percent pool of semi- and unskilled labour, with farmers opting rather, to mechanise, in order to manage labour costs.

Fourth, there is growing evidence that the intensive commercial farming sector has shifted from hiring permanent workers to using more seasonal workers, as farmers try to mitigate against the risks of heightened uncertainty in agriculture. Much of the sources of uncertainty stem from a number of land reform and restitution-related legislation – which include the Extension of Security Act, Expropriation Act, Protection of Investment Act – whose collective effect have led to a perceived weakening of property rights, and a general loss in investment confidence in the sector.

Against the four factors outlined above, there is little indication so far to suggest that the agricultural sector will generate jobs to anywhere close to the number suggested in the National Development Plan. In fact, the biggest challenge currently facing the ANC government is to reverse the terminal long-term trend of job losses in the agricultural sector, let alone create one million more additional jobs. The latter cannot occur without addressing the former.

So, as we look ahead, will agriculture ever generate an additional one million jobs at some point in the future, if the existing systemic risks and structural conditions are addressed? Keeping in mind that the one million jobs mantra effectively means more than doubling agriculture sector employment. Also, keeping in mind that historically, the sector's growth has not led to job growth, as witnessed over the past fifty or so years. Given the current realities, one can argue that the hope for an additional million jobs in agriculture is misplaced, and policy has put unrealistic and undue pressure on agriculture to generate job numbers that might never materialise.