Analysts unpack SA’s doggedly high unemployment
The economy needs to grow at least 6% a year for a decade to begin to solve jobs crisis
Unemployment in SA remained persistently high in the first quarter of 2018 despite a more positive political and economic environment.
The unemployment rate remained unchanged at 26.7%.
While growth forecasts have been revised upwards on higher confidence, greater political certainty and surprise growth in 2017, SA was not growing fast enough to reduce the unemployment rate, according to analysts.
"GDP will have to grow at more than double this rate in order to appreciably absorb new entrants and those that have grown despondent about finding employment," said FNB senior economic analyst Jason Muscat.
SA would need at least a decade of growth of between 6% and 8% in order to begin to solve the job crisis, labour analyst Andrew Levy said. Most current growth forecasts are between 1% and 2%. "The population is growing faster than the economy," Levy said.
The glaring issue of unemployment will not be addressed if the structure of the economy is left intact, said trade union federation Cosatu’s spokesman, Sizwe Pamla.
"The unemployment statistics are proof that economic growth is not enough to solve the triple crisis of unemployment, deepening poverty and inequality," said Pamla.
He said SA needs a better quality of growth that will optimally harness the country’s resources and increase absorption of the labour force into productive employment and income-generating activities.
Without the necessary policy intervention to address growth, youth unemployment, education issues and high unemployment are likely to persist into the foreseeable future, said NKC analyst Gerrit van Rooyen.
Slow economic growth makes labour absorption difficult, said BNP Paribas economist Jeff Schultz.
In April, President Cyril Ramaphosa announced a plan to attract $100bn in investment to SA over the next five years.
An increase in investment is expected to boost economic growth and tackle joblessness. The Youth Employment Service, a partnership between business and organised labour launched in March, is one of the initiatives aimed at creating internships.
"This will reduce unemployment in the short term but it’s an artificial solution. But in difficult economic conditions, it’s a great kick-start," said Levy.