Latest Stats SA employment stats show another decline in unemployment if we ignore the pubic sector (only area to have employed people). Researchers state unemployment looks gloomy for the ensuing rest of this year. Earlier reports implied we would lose another 400,000 jobs from July to December 2011. This now looks like it is on the cards as we nefariously appear to retrench people towards the end of the year.
Overseas, large corporates are again announcing massive retrenchments, yet the politicians tell us we are not heading for a double-dip recession! If you have followed my comments on this blog from the outset, you will have noticed that I pleaded for sustainable signs in recovery around employment and GDP growth, none of which we have seen since the financial crash 2008. Talk of green shoots have been simply that: talk. Despite massive dollar printing, this has all gone into rescue packages all over the world. These receipients remain in limbo with regard to recovery, cannot therefore service these ballooning debts, thus placing more lenders in larger economies under further stress. How does it end?
Well the only way out is for developed economies to splurge infrastructure spending, to get the construction industries going (these must be on financially viable projects, and regretfully this would include toll roads), create financial incentives for cash flush businesses to invest - look for example at China that subsidises factory rentals to allow for lower cost exporting, lower business taxes and in SA particularly shrink ever-increasing public sector employment.
These are immediate actions that can take place that would in essence lift public sentiment, a key driver for investment activity. Yes we will have to deal with rising inflation as a result, but that can be treated in due course with gentle normal economic tools.
Watch this space............
