SA has the highest unemployment rate in the world, according to the World Bank. Djibouti is in second position. We also have the second-highest youth unemployment rate in the world after Djibouti.
Mass unemployment is an opportunity cost — the lost GDP that could have been produced if the jobless millions were working. Assuming the unemployed would have the same GDP per worker as the employed, at a 5% unemployment rate SA would have had a R10.1-trillion economy in 2022 — two thirds higher than the actual figure of R6.6-trillion. The R3.5-trillion difference between the two numbers — that lost GDP — is the cost of mass unemployment.
I attended President Cyril Ramaphosa’s engagement with the media and academics in Sandton at the weekend. After listening to him for more than two hours it became clear to me that there is no plan to address the crisis. We cannot continue like this. Yet at the end of this month more than 200,000 teacher assistants who were employed in 23,000 state schools as part of the Basic Education Employment Initiative will have no jobs.
Youth Capital, a campaign to create jobs for young people, is documenting the testimonies of teacher assistants who say the initiative changed their lives. Khari-Sma Mashego, a 26-year old, said: “I went back to school (after the programme) so that I could gain admission to university and become a teacher and later on an educational psychologist.”
The initiative was part of the Presidential Employment Stimulus (PES) announced in October 2020. Since then the National Treasury has allocated R42.6bn to the programme. It has created 1.1-million jobs and opportunities — 795,151 new jobs, 249,115 livelihoods supported and 40,529 retained jobs. It is one of the country’s most successful public employment programmes.
PES projects were oversubscribed, but had to reduce their scale due to budget deficiencies. It could easily create more than 2-million jobs and opportunities, if there was budget. But the Treasury plans to end the programme in March next year — two months before the national election — because of an imaginary budget crisis. I was told the Treasury says it cannot fund both the R36.1bn social relief of distress grant and the PES, and that one or the other must get the chop.
SA has three public employment programmes that had a budget of R16.8bn for 2023-2024. They created 1.8-million work opportunities and 900,000 full-time equivalent jobs a year. The other two are the Expanded Public Works and the Community Works programmes.
SA is now at a critical crossroads, and must decide whether it wants to solve the unemployment crisis or not. It can continue with permanent austerity that will create an economic wasteland by 2030. Or it can start investing in its infrastructure and people again. SA cannot run out of the money it issues, and it has a vast public sector balance sheet. Its debt is not high by international standards.
The country can achieve full employment by 2035, according to my work for the Social Policy Initiative. But higher GDP growth alone will not be enough. The government must amalgamate its three public employment programmes and create a new quasi-public institution that is professionally managed and has civil society oversight.
The medium-term target must be to improve the quality of public employment and create 5-million jobs a year at a living wage of R5,000 a month.
• Gqubule is research associate at the Social Policy Initiative.
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