After a bounce-back from the devastation of the lockdowns of 2020, the labour market has returned to its prepandemic normal, where the drivers of unemployment will be the GDP growth rate and the growth of the labour force.
The lockdowns created a fundamental dislocation in the labour market as 2.2-million people lost their jobs and the absorption rate — the percentage of the working-age population that is employed — fell to 36%. By the end of 2023, the labour market had recovered to the prepandemic normal. According to Stats SA’s latest quarterly labour force survey, the economy created 22,000 jobs during the first quarter of 2024. But the labour force increased by 440,000 people.
As a result, the number of unemployed people increased by 419,000 to 12.1-million. The unemployment rate was 41.9%. For black Africans it was 46.3% and for women of all races it was 45.5%. The North West province has an unemployment rate of 53.6% and in the Eastern Cape, where my father’s side of the family lives, 49.1% of people did not work. There are now 7-million young people (aged 15 to 34 years) who do not work and their unemployment rate is 54.6%. There are 9.1-million young people who are not in employment, education or training.
We cannot continue like this, but ahead of the national election next week, none of the political parties has put forward a credible path to achieve full employment.
Since Cyril Ramaphosa became president six years ago, the economy has created 574,000 jobs, but the labour force has increased by 3.4-million people. As a result, the number of unemployed people increased by 2.9-million. The unemployment rate increased to 41.9% from 36.3%. But 239,000 young people lost their jobs, and the number of unemployed young people increased by 1.2-million. The unemployment rate for young people increased to 54.6% from 49.1%.
From the fourth quarter of 2008, at the peak of the previous cycle of rapid job creation, to the first quarter of 2024, the economy created 2-million jobs, but the labour force increased by 8.1-million. The number of unemployed people increased by 6.1-million. The most heartbreaking statistic is that 669,000 young people lost their jobs during this period. The employment multiplier, which measures the relationship between GDP growth and job creation, was negative for young people.
Pointless initiatives
SA must face the reality that there are no jobs for young people, and that all the initiatives that the government likes to boast about — for example, the SA youth.mobi website, where 4.9-million have registered in the hope of getting employment — are pointless when the economy does not grow.
Mass unemployment represents a huge waste of human resources and an opportunity cost for the economy — the lost output (or GDP) that could have been produced if the jobless millions were working.
With a 5% unemployment rate and assuming that the unemployed would have the same GDP per worker as the employed, SA would have had a R11.3-trillion economy in 2023 — almost two-thirds higher than the estimated figure of R7-trillion. The difference between the two numbers — that lost output of R4.3-trillion — is the cost of mass unemployment.
Mass unemployment makes SA a much poorer country. Put differently, SA will need an economy that is almost two-thirds larger to achieve full employment, defined as an unemployment rate of 5% and less. SA needs to achieve a GDP growth rate of 4% a year just to create jobs for the 700,000 people who will enter the labour force each year, let alone the 12.1-million people who are already unemployed.
We need a GDP growth rate of at least 6% a year to also reduce the number of unemployed people. Every year we do not achieve this target, the jobs crisis will get worse and everything we implement to address the crisis will fail.
• Gqubule is research associate at the Social Policy Initiative.
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