Identifying employment creating sectors in South Africa

by ALTMAN, M., 2005
Research Report, Employment Growth & Development Initiative, Human Sciences Research Council

Will Government’s current policy priorities and plans in relation to the formal services sector guide the economy towards its 2014 target of halving unemployment? Net new employment has mainly been found in formal and non-formal services. Given the structure of the SA economy, it is most probable that future employment will also be sourced from many of the same sectors, such as finance, ICT, and tourism. This paper explores possible scenarios for employment creation, with a special emphasis on services. As at 2004, the economy would need to generate about 480 000 net new jobs each year, in order to halve unemployment from 26,2 per cent to 13 per cent by 2014. This would require at least a doubling of the average annual job creation since 1994. Two scenarios are considered: the first under current conditions with similar rates of growth, and the second with substantial improvements in policy conditions, especially in relation to the promotion of trade in services. The first scenario leaves the economy with the same rate of unemployment in 2014. The second scenario sees a reduction in unemployment to 20 per cent.