The South African Civil Society Information Service

Misrepresenting the Causes of Unemployment

By John Treat and Enver Motala · 15 Apr 2014

Picture: Betakit

While finding solutions to South Africa’s high rates of unemployment continues to occupy a leading place in national debate, ongoing strikes over wages and working conditions continue to be met with threats of job cuts from employers. In a recent Business Report article called, “Job losses loom amid platinum strike”, Implats executive Johan Theron is quoted: “If the strike continues in the months ahead, we will unfortunately be forced to apply for a section 189 process.”

The statement begs a question: Forced by whom? If striking workers can “force” their employer to lay them off, presumably they could “force” the employer to accede to their demands. Alternatively, if “market forces” or “government” compel employers, why then should workers shoulder the burden?

This raises an underlying question about what “causes” unemployment. Mainstream discussion of these issues is dominated by voices allied to the corporate sector, often to the exclusion of other perspectives. For this reason, such discussions are shaped by assumptions – often unstated – about the nature and causes of unemployment. The resulting bias has profound implications for the particular interventions that are considered when addressing the problems of joblessness, and to achieve a social order that is more socially just, more politically tenable, and more ecologically viable.

To pierce through the fog, it is useful to step back and consider the broader range of factors that together determine unemployment levels at a given moment, and to examine the differences among them.

Among the full range of factors that contribute to unemployment, we might recognise three categories in particular: (a) real contributing factors that are portrayed more or less factually in mainstream reporting; (b) real contributing factors that are portrayed in a biased way; and, (c) alleged contributing factors that reflect deep ideological distortions. Any such categorisation introduces a degree of simplification; our concern is not to achieve some definitive categorisation, but to highlight patterns in the dominant discourse regarding unemployment, and to offer an interpretation of these trends that makes sense of them under present conditions and in light of existing social forces.

First, then, we might consider contributing factors to unemployment that are effectively ‘external’ to the productive relation at the level of the firm. Here we might think of: (a) technological developments outside the firm that increase competitive pressure; (b) the availability of cheap imports; (c) price or demand fluctuations of primary commodities; (d) declining mineral reserves. Such factors are ‘external’ to the productive relation in the sense that they are essentially beyond the control of the affected parties, at least in the near term.

For instance, when AngloGold announces plans to cut 400 jobs due to a drop in the price of gold, we can recognise a causal link: fluctuations in commodity prices impose constraints on the firm that call for some adjustment. To be clear, recognising that link does not in itself justify any particular ‘solution’ – in this case, the ‘solution’ of laying off 400 workers.  This contributing factor itself is not on its own a causal basis to exclude alternative solutions – e.g., protective measures or subsidies by the state. The exclusion of such options is a policy choice, made in response to the political pressures through which neoliberalism has been imposed.

A second category of contributing factors to unemployment can best be understood as similarly real, but which are often either ignored or portrayed tendentiously. Two cases are especially noteworthy.

Withholding of investment: When it is noted at all in mainstream reporting, decisions by holders of capital not to invest in production is usually described in terms of ‘investor caution’, ‘weak sentiment’, etc. What is striking here is that it is simply taken for granted that those who hold capital have absolute discretion regarding its disposition. Such a framing elides the social origins of capital: the fact that such capital originates in some combination of past dispossession and expropriation of the value of contributed labour.

An alternative framing might take the social origins of capital more seriously, and with it the implication that holding capital carries social obligations, irrespective of the wishes of the holder. “Corporate social responsibility” programmes implicitly recognise the inescapability of this logic, although their purpose is precisely to limit its effects and repurpose it for marketing purposes; the collective inadequacy of such programmes to address the systemic problems capitalism has wrought on South Africa is plain for all to see.

Off-shoring of profits: The removal of profits from the country in which they are created is often described in mainstream reporting as ‘repatriation’. The underlying metaphor is worth noting: the suggestion seems to be that the claim of ownership over the originally invested capital is tantamount to ‘paternity’, and the nationality of the ‘parent’ (capital) extends to the child (profits). Thus the ‘repatriation’ of profits generated in South Africa to the United Kingdom is likened to bringing home a child who has suffered the indignity of a colonial birth. Critics might refer to this phenomenon as ‘capital flight’. Even ‘kidnapping’.

There is a third category of factors that are routinely blamed for unemployment, but which when examined more closely are difficult to maintain: “high wage demands”, “low productivity”, “lack of skills”, “frequency of strikes”, “excessive regulation”.

There are two striking features that distinguish this category. First, these are often invoked essentially without argument or evidence: their role in “causing” unemployment has surreptitiously come to enjoy the status of “common sense”. Second, each arises directly from the contested power relation at the heart of capitalist enterprise.

This overlap is not accidental. The bias in how these factors are described by the dominant voices in the press arises precisely from their proximity to that power relation; it both reflects and confirms the corporate bias of mainstream discourse on these issues.

The pervasiveness of this bias must be attributed to the pressure to keep wages down – a pressure that is ever-present under capitalism at the level of the firm, due to the unrelenting pressure to maximise profits. The negative effects of suppressed wages, however, have wider social and economic effects beyond the firm through their suppression of demand across the broader economy.

The actual contribution of any of these factors to a loss of jobs cannot be assessed in isolation from consideration of the macroeconomic and socio-political context in which a dispute arises. To ignore that context is already to have taken a political decision that disadvantages workers. This matters because boosting workers’ wages can translate into a rise in demand for goods and services, and thus into potential jobs.

There is an urgent need to tackle the challenges posed by South Africa’s endemic unemployment. The dominant discourse itself is often part of the problem. It is vital that we eliminate its distortions, that we recognise the structural nature of unemployment under capitalism, and that we begin to plan more honestly and more ambitiously for work and livelihoods and a society beyond neoliberalism.

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