The State of Employment and Unemployment

by ALTMAN, M., 2003
The State of the Nation. Cape Town: Human Sciences Research Council Press

Altman outlines trends in employment, underemployment and unemployment in South Africa, and explains possible causes and policy implications. Net employment in South Africa was stagnant or falling since the early 1980s, mainly because of factors related to the Apartheid government’s policies of ‘Separate Development’. A large stock of unemployed built up over many years, and each year the economy has trouble absorbing not only this stock, but new entrants as well. The overall picture is complex: many formal jobs were lost, but since the mid-1990s, formal employment stagnated. There was considerable private sector restructuring, and any job creation that did occur absorbed higher-skilled labour. The main source of employment growth for lower-skilled labour was in the informal sector until 2000, but even this sector seems to be stagnant. Alongside stagnant employment is a context of high population growth and large net inflows into the labour market. By 2001, the strict and broad unemployment rates had risen to 30% and 41%. From a policy perspective, employment depends on both economic growth and the labour absorption capacity of the economy. Policy must target both of these. Higher growth rates are difficult to achieve, and do not in themselves guarantee labour absorption. This is partly because South Africa’s growth has been more reliant on intensive rather than extensive growth. Moreover, in a distorted market, particularly in the context of the Apartheid legacy, extracting more employment per unit of investment and output requires forceful stimulation and market reforms.