DUMA GQUBULE: Unemployment not on agenda of Treasury and Reserve Bank

SA’s unemployment crisis is a national disgrace, the most heartbreaking betrayal of the dreams and promises of our liberation. 

There is a relationship between GDP growth and employment. The National Development Plan (NDP) has a GDP growth target. It also has a jobs target — to increase employment from 13-million in 2010 to 24-million in 2030. But achieving these targets is apparently not the responsibility of the two most important institutions in the country. No wonder the NDP is a joke.  

The National Treasury is interested only in debt. If you read all the 2021 budget documents — more than 1,200 pages — the department says nothing about how SA will create jobs and achieve full employment. And the SA Reserve Bank cares only about inflation.

Throughout the worst economic crisis in almost a century — since the start of the lockdown two years ago — Reserve Bank governor Lesetja Kganyago talked only about the inflation rate. Yet US Federal Reserve chair Jerome Powell and his predecessors, including Janet Yellen and Ben Bernanke, always talk about jobs.

According to Stats SA’s latest labour force survey, there were 12.5-million unemployed people in SA during the fourth quarter of 2021. The expanded unemployment rate was 46.2%. The country had unemployment rates of 77% for youth, 50.7% for black Africans, 55.7% for black African women, 53.2% in the Eastern Cape, 52.8% in Limpopo and 52.4% in Mpumalanga.

The labour absorption rate, which measures the percentage of the working-age population (aged 15 to 64) that is employed, was 36.5%. The average for upper-income countries was 59.7% in 2021. For black Africans the absorption rate was 33.5%, compared with 62.6% for white people. For African women it was 32.4%. In the Eastern Cape only 28.3% of the working-age population was employed.

During the last quarter of 2021 there were 10.2-million youths (aged 15 to 24) in SA, of whom only 3.4-million were in the labour force and 3.4-million (32.8%) were in neither employment nor education or training. The tertiary education participation rate for Africans was 20% in 2019, according to the Council for Higher Education. In South Korea it was 98.5% in 2019.

Between December 2008 and December 2021 youth employment in SA plunged by 812,000 (51.1%) to 778,000 from 1.6-million. The number of unemployed youths increased by 641,000 to 2.6-million, pushing the youth unemployment rate to a horrifying 77% from 55.2%.

Between December 2008 and December 2021 the labour force grew by 6.3-million people. But employment fell by 225,000 to 14.5-million people. The number of unemployed increased by 6.5-million as 450,000 jobs were shed in the formal sector and 118,000 were lost in private households. A mere 282,000 jobs were created in the informal sector and 61,000 in agriculture.

A sectoral analysis shows that a total of 1.3-million jobs were created — in finance (635,000), community & social services (433,000), transport (121,000) agriculture (61,000) and mining (21,000). But 1.5-million jobs were lost, in manufacturing (781,000), trade (439,000), construction (143,000) and private households (118,000).

On this dangerous development path of 1.8% GDP growth until 2030, assuming an employment multiplier of 0.8 and an annual average 2.4% growth in the labour force — slightly lower than the pre-Covid average between 2013 and 2019 — there will be almost 17-million unemployed people in SA by 2030. The unemployment rate will be 50.9%.

The time has come to change course and chart a new path towards economic development until 2030 and beyond. There must be a new macroeconomic policy framework that has a GDP growth target of at least 6% a year that is binding on both the Treasury and Bank, with the objective of achieving full employment. We must all start behaving differently.

• Gqubule is founding director at the Centre for Economic Development & Transformation.