The South African unemployment crisis requires undivided attention from all stakeholders of the economy including but not limited to business, government and labour, writes PHELELANI MPANZA
An economy declared to be in technical recession and the recent unemployment figures from Statistics South Africa (StatsSA) continues to harm the economy. With these in mind, one can safely argue that the country is facing a deep structural economic crisis. StatsSA published its latest Quarterly Labour Force Survey (QLFS) results for the third quarter (July and September) of the year 2018, showing that South Africa’s unemployment rate increased marginally to 27.5%.
This means that the number of unemployed people rose by 127 000. A whopping 6.2 million South Africans cannot find employment in the labour market, compared with 6.1 million in the prior quarter. StatsSA also revealed that 2.2 million South Africans have lost hope in finding jobs and have not been unemployed for over a year, officially becoming discouraged workers. These figures suggest a poor state of our economic affairs in the third quarter.
According to the QLFS, the absorption rate remains unchanged at 43.1%. During the third quarter, the informal sector recorded employment gains of 188 000, while the formal sector, private households, and agricultural record decline in employment.
One notable finding and worrying outlook from StatsSA results was that the unemployment rate for those aged 25-34 is 52.8%, double that of 45-54 years old. Youth unemployment rate remains higher than other groups irrespective of education levels. With the implementation of Free Higher Education, arguably if there is no rapid economic growth, one can only expect this number to rise over the years as there will be an increasing number students graduating from universities flooding the labour market in search for opportunities.
Earlier last month, Bureau for Economic Research (BER) data revealed that since the 2008 global financial crisis, domestic real Gross Domestic Products (GDP) growth has underperformed relative to both emerging markets peers and average global growth. The data also shows that, under different assumptions regarding post-crisis growth and the elasticity of employment, the economy could have created between 500 000 to 2 million job opportunities over an eight years period. These recent unemployment figures are a complete opposite of what could have been achieved by now.
The bottom line is that South African citizens and the youth, in particular, are facing a great challenge to find means to participate meaningfully in the economy and this cannot longer be ignored. The South African unemployment crisis requires undivided attention from all stakeholders of the economy including but not limited to Business, Government and Labour.
Government under the leadership of President Cyril Ramaphosa must provide sound leadership and policy certainty to create a conjunctive environment for Corporates and Small Medium and Micro Enterprise to stimulate the needed growth to reduce unemployment. Much urgent attention will be needed in underdeveloped provinces such as Free State and Eastern Cape as they have recorded the highest unemployment losses.
The business sector has extended its hand through its investment commitments. It is hoped that the R290 billion announced at the Investment Summit will soon bear fruits for the country’s economy and also go a long way in solving the unemployment crisis.
Mpanza is a Director of Rethink Business Group and Ph.D. candidate at the University of the Witwatersrand, School of Economics and Business Sciences. He completed a BRICS exchange programme at Fudan University (China) and also served as the Finance Minister in the Model BRICS Summit 2016.