SA cannot afford youth with no chance of finding jobs
The official rate of SA’s unemployment rose to 27.5% in the third quarter, it was reported in the labour force survey released last week. This means 6.2-million South Africans were unable to find jobs. Expanded to include people whose repeated failure discourages them from looking for work, the number rises to 8.9-million, 37.3% of the workforce. Only 16.4-million of 38-million South Africans aged 15 to 64 years have jobs.
In 2008 the official unemployment rate was 21.5% and 4.3-million people were unemployed. Critics lambasted the economic policies implemented under then president Thabo Mbeki for delivering “jobless growth”. But growth was not jobless. More than 1-million jobs were created from 2005 to 2008, when GDP growth reached 5% per annum. But this was not sufficient to provide jobs for new entrants to the labour force or to make substantial inroads into existing levels of unemployment.
Since 2008 the number of unemployed people has risen by 1.9-million (45%). SA is not generating enough jobs to match population growth.
It is relatively easy for employers to make workplace changes so that the productivity of existing workers grows 1%-2% annually. Economies thus need to grow much faster than this to increase employment meaningfully.
The number of jobs has risen by 188,000 since the third quarter of 2017. This is a 1.1% increase, which is surprisingly high as GDP is not expected to have grown much more. It suggests productivity per worker has stagnated.
SA is now experiencing the harsh implications of low growth for employment.
Most worryingly, Stats SA notes a rapid growth in the number of people who have been without work for more than a year. About 4.3-million of the 6.2-million (68.8%) officially unemployed South Africans in quarter three are now longterm unemployed. Their number has risen by 1.7-million from 2.6-million (59.4%) in 2008. Two-thirds of those in long-term unemployment are younger than 34 years and have probably never had a job.
The rise in long-term unemployment creates terrible personal hardship, and the likelihood of finding a job declines once people have been unemployed for more than a year. This leaves them “at risk of being permanently detached from the labour market”. Stats SA also cites an Organisation for Economic Cooperation and Development finding that high levels of longterm unemployment indicate that the labour market is operating inefficiently.
The jobs summit was one step towards dealing with the failures of the labour market. More are needed. The University of Cape Town’s Nicoli Nattrass has noted that big business and organised labour co-operate in SA to provide workers with above-inflation annual wage increases offset by increased mechanisation and reduced job opportunities. Real wages and profits rise, but at the expense of those who lose their jobs or cannot find employment.
Finance minister Tito Mboweni recently warned that the government cannot make more funds available to meet an above-budget wage settlement. The implication is that public sector jobs will shrink.
No society can accept the prospect of young people facing a future without ever finding work. Labour and business, encouraged by the government, should make job creation an explicit goal of the bargaining process. Ways of building new common purpose might include union representatives on corporate boards.
Tackling the high level of school dropouts is another priority. Accelerated skills training and youth employment subsidies are others.
Urgent action is required to stop unemployment rising with further tragic social consequences.