The “government of neoliberal unity” and its cheerleaders in business and the commentariat have resorted to gaslighting South Africans into believing the economy has turned the corner.
In a desperate attempt to show that the snake oil remedy of structural reforms to cure South Africa’s chronically low GDP growth rate of about 1.1% a year over the past 17 years is delivering results, they are saying we must celebrate now that the unemployment rate and the debt ratio have stabilised.
In the budget on Wednesday, finance minister Enoch Godongwana is expected to announce plans to legislate failed austerity policies through a fiscal responsibility law. He could announce the introduction of five-year fiscal plans, an independent fiscal council to monitor government spending and a numeric fiscal rule — probably a primary budget surplus target that will continue to suffocate an economy that has inadequate demand or spending power. With a 3% inflation target and a fiscal rule, the government will not have the macroeconomic policy tools to grow the economy and reduce the unemployment rate.
According to Statistics South Africa, the economy created only 21,000 jobs during 2025. This was a sharp drop from the 355,000 jobs created in 2024 and the 789,000 created in 2023. South Africa needs to create more than 1.5-million jobs a year to achieve full employment by 2037. Yet the official unemployment rate declined to 31.4% during the fourth quarter of 2025, from 31.9% during the fourth quarter of 2024.
The only reason this has happened is that the labour force, using the official definition that excludes the “potential labour force” or discouraged work seekers, declined by 134,000 people. It is the first time since 2007, when South Africa was suffering from a crisis of HIV/Aids deaths.
According to the expanded definition, the unemployment rate increased to 42.1% in the fourth quarter of 2025 from 41.9% in the fourth quarter of 2024. The labour force, according to the expanded definition that includes the potential labour force, increased by 177,000 people. This was the lowest increase since 2008.
The Treasury and its cheerleaders will tell us we must applaud a third consecutive year of primary budget surpluses. But this is not a reason to celebrate, because chronically low GDP growth for so long means there is not enough spending power (or demand) in the economy.
In 2024 1-million people entered the labour force. In 2025 the labour force growth rate was 0.6%. This compares with annual average growth rates of 3% from 2021-24 and 2.6% from 2013-19. It is not clear why there has been such a sharp decline in the labour force using the official definition and such a low increase using the broader measure.
The Treasury and its cheerleaders will tell us we must applaud a third consecutive year of primary budget surpluses. But this is not a reason to celebrate, because chronically low GDP growth for so long means there is not enough spending power (or demand) in the economy. A primary budget surplus withdraws demand (or spending power) of about 2% of GDP a year from an economy that is on its knees. This reduces the GDP growth rate and increases the debt-to-GDP ratio.
South Africa’s debt has not stabilised. It has increased by almost R2-trillion since 2022. It is not clear how primary budget surpluses of almost R200bn a year during the 2026 medium-term expenditure framework period will make a difference in the context of debt of R6.1-trillion and a borrowing requirement of R500bn a year.
The Treasury’s austerity budgets and fiscal rules will serve the interests of the bond market and the financial sector — five banks and two insurers — and not the 40.8-million people who lived below the upper bound poverty line in 2023.
• Gqubule is an adviser on economic development and transformation.
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.