ALEX MALAPANE: Bold strategies needed to tackle SA’s unemployment crisis

The reported decline in SA’s official unemployment rate to 31.9% in the fourth quarter of 2024 suggests progress, yet a closer interrogation reveals critical economic vulnerabilities that should not be overlooked.

Employment increased across various sectors, including formal, informal and private households, but the agricultural sector saw a decline of 11,000 jobs, raising concerns about the sustainability of these employment shifts.

While encouraging, the reported 2.1% year-on-year increase in employment does not necessarily equate to structural economic transformation or long-term job security. 

Youth unemployment remains a national crisis, with nearly two-thirds of jobseekers unable to find stable employment. The mismatch between available skills and market needs has widened, locking many young South Africans out of meaningful economic participation.

The over-reliance on a low-skill, low-wage labour market fails to translate employment gains into sustainable economic growth. GDP growth, which remains sluggish at 0.9% in the last quarter of 2024, signals that increased employment has not led to significant productivity improvements.

Without structural changes, these job gains risk being short-lived, failing to shift the country’s economic trajectory. 

One of the biggest barriers to sustainable employment is the lack of targeted support for small, medium and micro enterprises (SMMEs). These businesses account for nearly 60% of private sector employment in SA but remain vastly underfunded and unsupported.

Government must prioritise policies that reduce red tape, improve access to funding and provide structured incubation programmes that equip entrepreneurs with the tools to scale their businesses.

If SMMEs are given the right financial and regulatory support, they could absorb a significant portion of the unemployed workforce, particularly young people who struggle to find formal employment. 

Beyond funding, structural incubations must be established to integrate jobseekers into high-growth sectors. The global digital economy is expanding rapidly, yet SA is lagging in preparing its workforce for this shift. E-commerce transactions have increased by over 30% year-on-year, yet government-driven initiatives to channel unemployed youth into digital workspaces remain minimal.

Skills development programmes focusing on coding, data analytics, fintech and digital marketing must be prioritised. Public-private partnerships should be leveraged to establish tech hubs that provide training, mentorship and employment placement opportunities. 

The government must also re-evaluate its approach to incentivising businesses to hire young workers. Current employment tax incentive (ETI) schemes must be restructured to prioritise industries with long-term growth potential rather than facilitating short-term hiring sprees that do not translate into sustainable careers.

More aggressive measures should be considered, such as wage subsidies for first-time jobseekers and skills transfer incentives for companies training new employees.

Workplace experience

Workplace experience remains a major barrier to youth employment and government must work closely with industry leaders to expand apprenticeship and internship programmes that lead to full-time jobs. 

SA’s economic policies must shift towards sectors that drive sustainable employment and long-term economic expansion. Historically, key mining, manufacturing and agricultural employers require modernisation and investment in automation and skills development to remain globally competitive.

Infrastructure development must also be accelerated to stimulate construction, logistics and energy job creation. For instance, renewable energy projects hold significant potential for job creation, but bureaucratic delays and inconsistent policy implementation have stalled progress. Streamlining regulatory processes and fast-tracking approvals could unlock thousands of jobs in this sector. 

Informal economy

The informal economy, which employs millions of South Africans, must be formalised and supported. Street vendors, township businesses and freelance workers are crucial to the economic ecosystem, yet they remain excluded from financial services, social protections and business development support.

The government should introduce policies that provide micro-financing, training and business registration incentives to help informal traders transition into the formal economy, increasing their earning potential and economic contribution. 

While the reported employment gains signal some progress, they remain insufficient to solve SA’s deep-rooted unemployment crisis. If decisive, long-term strategies are not implemented, the country risks remaining trapped in a cycle of seasonal job gains with limited economic impact.

Government must celebrate statistical improvements and critically evaluate whether these shifts meaningfully alter the economic trajectory.

There is an urgent need for bold interventions prioritising economic transformation, skills development, structured incubations, SMME support and sustainable job creation to ensure a resilient labour market and robust economic growth. 

• Dr Malapane is an independent economic analyst, strategist, conference speaker and facilitator, and multidisciplinary researcher.