DUMA GQUBULE: Why the ANC cannot apologise for the jobs disaster
The economy must have a 6% growth target that is binding on the Treasury and Reserve Bank
We cannot continue like this. What more evidence does the governing ANC need to admit that its macroeconomic policies have failed to deliver jobs? Structural reforms and austerity cannot deliver jobs even if they are fully implemented.
The ANC must apologise to the nation and admit what most already know: that its macroeconomic policies are not working. The reason it is not admitting its wrongs is that the business sector and organisations such as the IMF and World Bank are cheering it on and enabling the continuation of bad economic policies.
During the fourth quarter of 2008 there were 5.9-million unemployed South Africans and an unemployment rate of 28.7%. From then until the second quarter of 2023 the labour force increased by 7.5-million people, but the economy created 1.6-million jobs, equivalent to 11.7% of the people who were previously unemployed and new entrants into the labour force combined.
As a consequence, during the second quarter of 2023 there were 11.9-million unemployed South Africans, and the unemployment rate was an eye-watering 42.1%. The rates for black Africans was even worse at 46.6%, and 50.6% for black African women. The youth unemployment rate is 70.2%, with 9-million young people (aged 15-34) not in education, employment or training. This is how revolutions start.
The lame proposals to address this crisis put forward by the government and its allies in business do not address the youth unemployment crisis. And they profess to be shocked when the EFF attracts 100,000 young people to a rally.
It serves them right; that is what you get when you enable bad economic policies and do not provide credible alternatives to address the unemployment crisis.
The first step towards understanding the scale of the crisis is that SA must have a GDP growth rate that is high enough to create enough jobs for the annual new entrants into the labour force and those who were previously unemployed. Over the past two decades — if one excludes the periods of deep dislocation in the labour market during the global financial crisis and Covid-19 pandemic — there was an employment multiplier of 0.9.
The multiplier measures the relationship between GDP growth and job creation. We need a GDP growth rate of 4.9% just to create jobs for the new entrants, let alone the 11.9-million who are already unemployed.
Therefore, we must have a new vision and plan for the economy that has a 6% GDP growth target that is binding on the National Treasury and Reserve Bank. Everything else is a distraction. A non-negotiable GDP growth target is the way to start healing the trauma of SA’s painful past.
Without a binding target that mobilises society there will be no future for SA, especially the youth. Everything we try to implement to address the unemployment crisis will fail. Every year we postpone setting a target and making the bold decisions required to achieve it will make the unemployment crisis worse. The ANC tried to put a positive spin on a decline of 0.3 of a percentage point in the unemployment rate.
But all that has happened in the labour force is that there has been the financial market equivalent of a dead cat bounce since the end of the lockdowns. From the fourth quarter of 2021 to the second quarter of 2023 the economy created 1.8-million jobs. During 2022, employment increased by 9.6% in an economy that grew by 2%, with an employment multiplier of 4.8. Yet we are still 37,000 jobs below where we were before the start of the pandemic, and the pace of job creation will subside during the rest of 2023.
In 2024 the labour market will return to the pre-pandemic norm, with a multiplier of about 0.9. If we do not change SA’s failed macroeconomic policies, the jobs nightmare will continue as the number of unemployed people continues to rise.
• Gqubule is research associate at the Social Policy Initiative.
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