This week’s jobs numbers poured some cold water on the overall slightly more optimistic mood in SA since the new government of national unity (GNU) took charge.
Despite a gradual economic recovery, Stats SA’s jobs data for the second quarter of 2024 showed the country is grappling with a persistent rise in unemployment.
Unemployment increased from 32.9% in the previous quarter to 33.9% — the highest it has been since the end of the Covid-19 pandemic in the first half of 2022.
For young people with less skills and experience, the situation is even worse. The age groups 15-24 years and 25-34 have the highest unemployment rates of 60.8% and 41.7%, respectively
Also, the number of job seekers unable to find work rose to a new high of almost 8.4-million people and that does not include those without jobs who have given up looking for work. Under the expanded definition, which counts not only those seeking work but those too discouraged to look for a job, the unemployment rate now sits at 42.6%.
The GNU can’t be blamed for the increase in unemployment, given that employment is a lagging indicator. The latest numbers are probably still part of the hangover from a weak economic performance and intense load-shedding in 2023.
However, the jobs number clearly show where the new government’s focus must be — and the GNU has already committed to reducing unemployment over the next five years. To succeed, this government would have to bring long-lasting political and policy stability to the country to attract the type and scale of investment required to fix what is broken and build what is needed.
The just transition can be an important source of job creation over the next five to 10 years, but it won’t create the many millions of jobs that will be needed to keep up with a growing labour force. SA added about 1.8-million jobs since the start of 2022, but the labour force grew by 2.2-million to 25-million people.
A new study by Boston Consulting Group suggests that SA has the potential to create up to 275,000 green jobs by 2030, with the bulk of these jobs likely to come from the energy sector — solar in particular.
Modelling done by the Energy Council of SA, which shows that SA needs about R1.8-trillion in investment in the electricity sector over the next 10 years to get to a 40% renewables penetration in the energy mix, suggests that localising value chains to deliver on these investments could create more than 500,000 jobs.
What these studies show is that even if SA manages to meet ambitious just transition targets the economic activity this will spur will only add about 50,000 jobs per year.
To stop the unemployment rate from increasing, SA needs broad economic growth. The country must get to 2% growth (which was last achieved in 2013) as fast as possible, which modelling from the Bureau of Economic Research (BER) has shown could be achieved by next year if reforms in the energy, and logistics and transport sectors continue to happen at a fast pace.
But to start to see a real reversal in the unemployment rate, SA must start seeing growth of 3%-5%. For now, 5% is probably only a distant possibility, but the BER’s modelling shows that 3.5% could be possible within the next five years if the structural reforms that were started under phase 1, and those that will be realised under phase 2, of Operation Vulindlela hold and gain momentum.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.