Cyril Ramaphosa faces surging unemployment problem
President Cyril Ramaphosa has been dealt another blow as SA’s unemployment rate climbed to an 11-year high, nearing the 30% mark.
Reducing the unemployment rate and putting the economy on a robust growth path are at the top of the priority list in Ramaphosa’s reform drive. In 2018, at the inaugural jobs summit, he promised to create 275,000 jobs a year, but with the economy slowing this is looking increasingly unlikely.
Sizwe Nxasana, Chair of the Ikusasa Student Financial Aid Programme speaks to Business Day TV about the pertinent role education plays in addressing SA's youth jobless rate.
There are also growing concerns that Ramaphosa might not be able to push through structural changes to address racial disparities in income, housing and other services as some influential leaders within the ANC appear to be opposed to his agenda.
Unemployment jumped to 29% in the second quarter of 2019. This was much higher than expected, with economists polled by Bloomberg expecting a rise to 27.7% after the 27.6% recorded in the first quarter.
Unemployment has not been this high since the first quarter of 2008, when Stats SA first started recording unemployment on a quarterly basis. The last time unemployment was higher than this was in March 2003, when it stood at 29.3%. However, Stats SA did not measure employment on a quarterly basis at the time, statistician-general Risenga Maluleke said.
6.7-million people without jobs
There were 6.7-million people without jobs in the three months to the end of June, compared with 6.2-million people in the prior quarter, data from Stats SA showed.
“The unemployment situation — the product of years of economic mismanagement — is undoubtedly SA’s most pressing matter,” NKC analyst Jacques Nel said.
The economy contracted 3.2% in the first three months of the year, hit hard by the worst bout of power outages the country has seen. While the economy is expected to rebound in the second quarter after a slew of positive data releases, many estimates for the year indicate that the economy will grow by less than 1%.
According to the National Development Plan, which is the economic blueprint for SA, GDP would need to grow 5% a year to make a dent in the unemployment rate. However, the economy has not grown more than 2% since 2013.
“SA’s economic malaise is weighing heavily on the country’s ability to create employment. However, turning the tide on the weak economy is not enough: structural changes are required in order to accelerate employment creation and reduce the unemployment rate,” PwC chief economist for Africa Lullu Krugel said.
Cosatu spokesperson Sizwe Pamla said the government had done little to honour its agreements made at the jobs and investment summits held in 2018.
“There is no government plan to solve the situation if the state of the nation is to be believed. A promise of 2-million jobs over 10 years when you have the highest unemployment rate in the world is an admission of defeat,” he said.
SA Federation of Trade Unions general secretary Zwelinzima Vavi said the rising unemployment trend in SA has become entrenched.
“We have made endless calls to government to abandon the current economic policies they have embarked on. We have been marching and doing all sorts of things. We just don’t know anymore. We are just waiting for the implosion to happen,” he said.