Among the most important markets in any country is one that connects most citizens to the economy, enabling them to benefit from its growth and development. That is the labour market, whose effective workings are important for socioeconomic development and political stability.
There should therefore be no greater urgency for the new government than getting SA’s labour market to work well — that is, enable those who seek work to sell their labour to potential employers, ideally at wages that enable workers to make a decent living.
That’s because SA’s success, or continued failure, in getting its army of unemployed, especially the youth, into jobs and over time raising the living standards of those with jobs, will determine its political stability.
The protests in Kenya, where young people have forced the government to scrap proposed tax increases, are a warning of what would eventually hit SA too. Those young Kenyans, as with many of their SA counterparts, have for some time felt that they had no stake in the country’s economic progress.
...clearly SA’s labour market isn’t delivering, certainly not in the quantities that are required to drastically reduce the country’s army of unemployed
In the first quarter of this year SA had more than 41-million people in the 15—64 age bracket, those who are statistically referred to as the working-age population. Statistically because people these days remain “economically active” way beyond age 65, the official retirement age.
Of the working-age population about 25-million were classified as the country’s labour force (the total of those who had a job of sorts (16.7-million) and the unemployed (8.2-million). A job of sorts, because among the employed are those who work in the informal sector and the working poor (those whose incomes from work aren’t enough to cover the basics).
The remainder (16.2-million) fell under the category of “not economically active”. This latter group includes all those who were neither employed nor unemployed during the survey period because they were at school or university or in skills training. Or they were engaged in household duties (running a household, for example), work wasn’t for them, or because of infirmity or disablement.
The latest Reserve Bank Quarterly Bulletin sets out SA’s labour market problem clearly. Of the 8.2-million South Africans who were unemployed during the first quarter of this year, 42.9% were new entrants into the labour market — young people. Close to 30% were people who had recently lost their jobs, while 21.8% had last worked a year or more ago.
“The proportion of long-term unemployment (being unemployed for one year or longer), total unemployment remained elevated at 75.2% in the first quarter of 2024 but has gradually been declining from a recent peak of 80% in the fourth quarter of 2021.”
Among 15-24 year-olds unemployment is closer to 60% and among 25-34 year-olds it is more than 40%. The number of young people who are not in employment, education or training is, at 35.5%, way above the global average of 21.8%.
So, clearly SA’s labour market isn’t delivering, certainly not in the quantities that are required to drastically reduce the country’s army of unemployed. There are several factors are play here.
Economic growth (the creation of new employers) is a key determining factor for the level and speed of job creation. Then there is human capital formation (education and skills development). What kind of jobs are being created — skilled, semi-skilled or unskilled — is also important, as is the match, or mismatch, between the kind of labour that is available versus what employers require. Finally there is the geography of jobs — where in the country they are being created and the ease of access to these jobs by the unemployed.
All five factors, plus others, have a huge effect on the effective workings of a labour market. This means making SA’s job market work for all requires a keen focus on all five. If the economic growth rate remains as pedestrian as it has been for almost a decade, you can forget about job creation at rates that will absorb millions of new entrants into the labour market and those who have lost their jobs.
In this it also matters which sectors of the economy are growing — the financial service sector isn’t a big absorber of unskilled workers and those with low levels of education, for example. This also talks to the mismatch between what those employers who are still hiring require and what the unemployed bring.
Given the country’s spatial mismatch (where most of the unemployed live far from job opportunities), the ease with which job seekers can get to jobs (cheap public transport) matters too.
• Sikhakhane, a former spokesperson for the finance minister, National Treasury and SA Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
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