When you’re stuck in a hole, it doesn’t help to pretend you can just take off like an Olympic sprinter. First you need to level up.
The same principle applies to SA when it comes to the jobs deficit. We can’t magically turn into China and grow our way out of the problem. Rather, we have to find solutions that fit our own peculiar realities. Inevitably, they will be disruptive, difficult, risky and costly. But the alternatives are all worse.
It’s not hard to measure the hole we’re in. In SA only 40% of adults have income-generating employment. Internationally the norm is 60%. The ratio in SA has remained almost unchanged since the mid-1980s.
From 1996 to 2024 the country’s GDP grew 82%, employment 85% and the working-age population 72%. In other words, over the past 30 years employment rose roughly as fast as GDP, and only slightly faster than the population. That is enough to stop joblessness from worsening, but not to close the gap to the rest of the world.
To raise the share of adults with employment to 55% by 2035, SA would have to create close to 10-million new jobs. That would require employment growth of 4.5% annually — and we’d still fall short of the global norm. But realistically, SA is not going to grow that fast. During the global commodity boom from 2001 to 2011 GDP grew just 3.5% a year. Since then growth has slowed to less than 1% a year. Meanwhile, the population is growing just less than 1.5% a year.
If SA could boost GDP growth to 4.5% a year from now to 2035 the problem would sort itself out. However, since the end of the commodity boom only one in seven countries has sustained that level of growth for a decade or more — and none of these fortunate few were upper-middle-income economies like SA.
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During the commodity boom in the 2000s almost half of all countries averaged more than 4.5% growth a year, including just under a third of the upper-middle-income group. But those halcyon days are not likely to return anytime soon.
It follows that overcoming the jobs deficit requires a shift to more labour-intensive growth. If GDP averaged 3% a year through 2035, employment would still have to grow 50% faster. GDP growth would generate about 5-million jobs, but the other 5-million would require a jump in employment for each R1m of goods and services produced.
Achieving this kind of structural change requires a sea change in programmes both to support existing businesses and to develop new activities. It would have to start with a review of the industrial-policy paradigm that has solidified over the past 30 years.
That paradigm prioritises increased productivity above all else. In other words, it aims to produce more for less, which cannot grow employment on a mass scale.
To be clear: SA needs to sustain existing industries and ensure they remain competitive. However, that alone won’t overcome the jobs deficit. If productivity gains led to an export boom, the situation would be different. But neither SA goods exports nor global merchandise trade has grown significantly since the early 2010s.
Ultimately, a qualitative acceleration in employment creation requires support for any kind of production that lets people earn an income. It could involve, among other things, increased support for formal light industry and services, and less conventional approaches such as franchising and outsourcing schemes; expanding community services; adding more education and health assistants; and the gig economy.
It also needs a laser focus on ensuring more efficient and more affordable government services for economic actors, both large and small. Achieving this kind of reprioritisation requires both clarification of the core aims of industrial policy and a realignment of government agencies to achieve them.
• Makgetla is a senior researcher with Trade & Industrial Policy Strategies.
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