NTHABISENG MOLEKO: A national unemployment rate of 41.2% is beyond a crisis

A grim reality set in as I read the recently reported 2023 third quarter Labour Force Survey. The unemployment crisis is not a recent development. It has been persisting for at least the past decade.

According to Stats SA a decade ago, in the third quarter of 2013, unemployment was at 4.9-million people, with the majority (3.2-million) of the jobless experiencing long term unemployment.

Today unemployment is at 7.8-million, meaning 31.9% of South Africans are unemployed. This figure is still giving us an optimistic view of unemployment as it excludes those who are so disillusioned that they have given up looking for work.

The number of discouraged workers adds an astounding 3.2-million people to the unemployed, putting the true rate of unemployment to an astonishing 41%.

It’s disheartening for me to note that nothing is being done about it. Despite the size, scale and prolonged length of the unemployment crisis, our economic and labour market policies remain unchanged. Perhaps it is more apt to say we have surpassed crisis levels.

Yet SA's trade, monetary, industrial and agricultural polices remain the same. And we as South Africans wonder in dismay at the worsening unemployment trends. A re-evaluation of policies to enhance labour absorptive capacity are urgently needed. Policies that are not working cannot remain untouchable.

The number of discouraged work seekers, which is but a portion of the total unemployed, is generally not included in the narrow definition that is cited by media and government. Discouraged work seekers alone currently equal the number of long term unemployed in 2013, at 3.2-million.

Youth in rural areas and townships who were unemployed a decade ago have remained unemployed. In addition, new entrants to the labour market annually add an average of 290,000 to the ranks of the unemployed, a total of 2.9-million newly unemployed in the past decade. That is a crisis by any labour market policy standard and economic output measurement.

It was recently reported that the narrow unemployment rate, which excludes the 3.2-million discouraged work seekers, has declined by 0.7% this quarter. We must move towards a more comprehensive reporting of the unemployed (non-economically active) so that the true extent of the problem becomes apparent to every South African.

The full picture highlights the following: seven out of nine provinces have unemployment levels exceeding 42%, with Gauteng knocking at the door with 39.4% by the expanded definition. Rural regions are generally economic wastelands, unable to offer the majority of their populations — the youth — opportunities to not only contribute to the SA economy but fulfil their own destinies.

An unemployment level of 51.2% in the North West means from Rustenburg to Brits and Phokeng to Marikana and Mahikeng, most of the labour force is sitting at home doing nothing. Cities, towns and villages are filled with despondent, crushed, discouraged people who should be at the peak of their energy, strength and mental vigour. The same applies to Mpumalanga, Limpopo, the Free State, Eastern Cape, KwaZulu-Natal and the Northern Cape.

A national unemployment rate of 41.2% is beyond a crisis. Significantly more effort needs to be made to ensure our youth can escape a life of alcohol and substance abuse, mental health issues, transactional relationships and even crime, simply to put food on the table. The interventions must seek to increase the absorption rate of youths aged 15-24 years, which sits at 11.2% this quarter, significantly lower than the 59.6% for 45-54 year-olds.

Even at its highest levels post-democracy, SA’s economic growth showed a concerning trend of jobless growth. Chronic unemployment dogs our youth, whose unemployment level is almost double the national average at 60%. Yet all the economic plans, strategies and reports that have been generated have had little to no effect on the absorption rate, or even the participation rate as directly measured.

No economic plan or strategy should be supported by South Africans that doesn’t refer to its effect on the unemployment levels of youth, black African women and residents of rural areas, who in the history of the labour force survey have displayed levels higher than the national average. If more women and youth were employed unemployment levels would decline as the labour absorption rate would improve.

A tree that bears no fruit must be cut down. Likewise, economic policies that have not improved labour absorption rates or put a dent in SA's chronic unemployment levels must be cut down.   

• Dr Moleko is an economist at Stellenbosch Business School.