The State of Employment

by ALTMAN, M., 2004
State of the Nation: South Africa 2004-2005. Chapter 16. Cape Town: Human Sciences Research Council Press pp 423-454

Altman considers the meaning of job creating versus jobless growth, and assesses the character of employment creation in South Africa. She reviews the extent of job creation in the economy and compares this with the pace of labour force and economic growth. She then assesses the quality of these jobs and their contribution to household livelihoods to evaluate whether the economy is on a sustainable growth path. The possible contributors to rising unemployment and slow employment creation are also reviewed. While South Africa created 115 000 jobs annually between 1996 and 2002, it only absorbed 20–30% of new entrants to the labour force every year. This explains why unemployment rose by 1–2% each year and shows that South Africa is not yet on a sustainable employment growth path. In addition, even among the employed, a diminishing proportion are in the formal sector where relative earnings are higher. This has serious implications for household welfare, since wage income is the single most important contributor to shifting families out of poverty. Surprisingly, Altman shows that a large portion of new employment since 1997 was accounted for by low- and semi-skilled workers. However, the informal sector has not grown since 2000, which is very difficult to understand. Thus the overall picture is still uncertain, and a sustainable employment growth path is still elusive. Bolder policy will be required to improve the workings of labour markets, and also to fast-track private and public sector-linked employment promotion.