Cape Town still leads the jobs race – what eThekwini can learn

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JEREMY MAGGS: Now, at a time when South Africa’s unemployment rate has climbed back to over 33%, almost 34%, one major city, it seems, might be moving sharply in the opposite direction. eThekwini now has the lowest official unemployment rate of any of the country’s metros at 21.2%, marginally better than Cape Town, and it’s the only metro where unemployment fell both quarterly and year-on-year.

Read: eThekwini records lowest official unemployment rate of any SA metro

So does that really make Durban, South Africa’s new jobs powerhouse? What’s actually driving the numbers, or is there a counterpoint to this argument? I want to talk to Professor Justin Visagie, who’s an associate professor at the Southern Centre for Inequality Studies (SCIS) at Wits University here in Johannesburg.

Justin, welcome to you. So is eThekwini genuinely creating more jobs, or does the unemployment rate just make the picture look a little better than it really is?

JUSTIN VISAGIE: Thanks for having me on the call, Jeremy. It’s unfortunately quite a technical discussion, but I think important for your readers to appreciate, and that’s that these results ultimately come down to Stats SA sampling, a group of households in South Africa, and they collect information on around 60 000 individuals in total. It’s actually a miracle of statistics that you can use just 60 000 people to represent 63 million and get quite an accurate result.

But what people need to be aware of is that there can be a lot of politics that goes on and how you recreate the numbers, how you do the sampling. Unfortunately, when it comes to this very localised picture of unemployment and employment in eThekwini, it’s just not being measured accurately enough.

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So to start off with, it’s just not true to say that eThekwini is now the new employment capital of the country. We need more data. We need bigger samples. 5

That said, our cities definitely need to employ more people, and it’s an important issue. But I think we need more time, and we need more research to really make this a real number and not just something that’s part of statistical modelling.

JEREMY MAGGS: So to that point, then, what specific evidence would convince you this is a genuine jobs boom rather than just, as you’re suggesting, some anomalous statistical movement?

JUSTIN VISAGIE: Good question. I think a few things. The one is that when you repeat these surveys over time, you get more confidence if the numbers remain consistent over a period of time. What we see with the quarterly labour force statistics is that Cape Town does perform consistently better than the other metros. I think eThekwini performs okay, but I would be surprised if it were the number one performer. We would need more of these surveys to take place and then compare averaging over at least a year or two-year period.

The second is that we can use other sources of data. I’m involved with a project where we actually mine tax returns, and this is very accurate, because in some ways it’s a whole universe of formal employment.

When you look at and you measure employment in terms of tax data, in terms of our cities, what we see is Cape Town has performed number one since 2014 to date, that’s when the data period starts.

Tshwane is number two, and eThekwini is number three. So it’s true, eThekwini has been performing a bit better. But as I’ve said, I wouldn’t over-bloat the story to say eThekwini is now number one.

JEREMY MAGGS: Let’s give KwaZulu-Natal, though, the benefit of the doubt – and maybe just because I spent a couple of very happy years working there – but your broader research also shows that Durban still has a substantial base in trade services, public and social services, I think you list, I think you might add to that list, manufacturing and logistics. Are you able to tell us then which of those sectors is actually producing real, meaningful jobs?

JUSTIN VISAGIE: Yes. Again, an important question. We can certainly use the tax data, which is very granular, to get a better picture of what’s driving growth in our different cities. Again, I think it’s important to emphasise that they don’t have to compete with one another. There’s a lot of politics around the numbers and who’s better and who’s worse.

But I think everyone in South Africa really has an incentive for all our cities to do better. So eThekwini can do well, and that can actually drive growth in other parts of the country.

eThekwini’s strength has definitely been its manufacturing base and, in fact, fairly diversified, not just one particular manufacturing industry.

Like you see, for instance, in Nelson Mandela Bay, where it’s automotive heavy, Ekurhuleni has tended to be more around heavy industry, eThekwini has more of a diversified sector, so that’s its strength.

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But the truth is that all manufacturing industries have actually been in trouble in South Africa over the last decade, and so the automotive industry has done a little bit better. In eThekwini, you also see food and beverages performing better, but then in other sectors, the decline in clothing and textiles, for instance.

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eThekwini does have a manufacturing future. But it’s certainly under a process of pressure and change and evolution, and it does need to diversify into places where it can compete and export on a global level. That’s ultimately what we’re looking for.

JEREMY MAGGS: Surely the fact that it has the country’s busiest port must, in one way or another, count in its favour, maybe just because of the ancillary industries that occupy space around that.

JUSTIN VISAGIE: Definitely. Again, this is a story of some of South Africa’s biggest economic woes over the last 10 to even 20 years has been that we haven’t looked after our state-owned enterprises. Eskom is the prime example, and I think that Transnet doesn’t fall too far away from that.

I remain optimistic that we have been under a process of reform since we’ve had a coalition government, and I think there’s been a heightened appreciation that you need the right skills leading these key state entities. Because if you don’t get that public infrastructure working, clearly, so many businesses depend on it.

eThekwini’s port is the busiest port in Africa, a key entryway into Gauteng. Again, it’s not going anywhere, but I think that if anything, we haven’t invested enough in our new infrastructure, and it can become a drain rather than a springboard for the future.

So it’s very important that that infrastructure gets turned around and that we focus on Transnet and the performance of Transnet to be more competitive.

JEREMY MAGGS: Justin, just a quick one in conclusion, is there anything that the other metros can specifically learn from what Cape Town is doing?

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JUSTIN VISAGIE: Each metro faces a unique situation. So in some ways it’s a bit unfair to compare them. For instance, Cape Town, in terms of its demographic base, has always had a more educated population. So in some ways, they’re lucky. Whereas eThekwini, for instance, I think actually has a large rural population as part of its base.

So all the metros have different baselines, and sometimes this means they have unique circumstances. But there are key lessons, and I think what Cape Town has done very well is in doing the basics right. They’ve invested a lot of infrastructure in terms of performance and monitoring, and a system of integrated governance across all of their line departments that line up.

Whereas some of the other metros, Johannesburg is a prime example, have tended to have silos. Multiple entities, multiple leadership bodies are often at cross-purposes with one another, and not enough of a clear line of sight of deliverables on the ground.

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So for eThekwini, and the readers might be aware of the Presidential eThekwini Working Group (PeWG) that’s been working for the last two years, these are important initiatives where we don’t just think about different departments in isolation of one another, but you’ve got to stitch it up together that the investment in road, rail, water, utilities and other industrial incentives all come together, working in the same direction.

I think Cape Town is a prime example of doing that very well in terms of its integrated governance model.

JEREMY MAGGS: Justin Visagie, associate professor at the Southern Centre for Inequality Studies. Thank you very much.

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