About this site

This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

447 extended footnote on unemployment

There are two ways in which unemployment ids measured in South Africa. The official way, used by StatsSA uses the cohort of the economically active population that is included among those who are actively seeking work. Once a person is no longer registered as actively seeking work, he/she is no longer considered to be unemployed. Thus the official measure does not include persons who do not register with the unemployment bureau, those who simply give up on continuing to register with the bureau, those who have never registered & those who do not register after they are retrenched. On the other hand it fails to take into account people working in the informal economy.

Failure of the economy to create jobs can be attributed to many causes, many outside of the government's s ability to control: economic growth is capital intensive; increasing productivity frequently requires the substitution of capital for labor, technological innovation and information technology further reduce the need for unskilled labor, the mismatch of demand and supply – there are, according to estimates 3.5 million skilled jobs that cannot be filled and the supply side of the labor equation cannot produce skilled labor in the numbers required both to fill the existing shortage and provide a pool that further expansion in economic activity can draw on; rand volatility, but especially the strengthening of the rand against the dollar has made exports more expensive and hampered growth of the manufacturing sector; the gold mining business has shed almost 240,000 jobs in ten years, opening the economy resulted in job losses in previously protected industries, levels of direct capital formation ( around 15 percent of GDP are well below the level considered a perquisite for rapid economic growth ( 20 to 25 percent), the number of people coming on the labor market exceeds the ability of the market to absorb them. SA creates new jobs but that numbered is far outweighed by the combination of the number lost and the excess labour entering the market for the first time.

The rand has almost doubled in value against the dollar since 2001 and the Johannesburg Stock Exchange (JSE) has become an emerging markets favorite. The strong rand and all indicators are that it will get stronger still against the dollar, given that the dollar is estimated to have to fall between 30 percent and 40 percent against a basket of major currencies to correct global imbalances in trade ( the US now absorbs 80 percent of global savings to finance its a dual trade and budget deficits and the savings rate is negative) has had an impact on the export sector of manufacturing industry and job losses in that sector are likely to grow the stronger the rand grows on the pull of rising commodity prices. SA is running a serious trade deficit (cheaper imports), which is possible to maintain as long as capital inflows cover the deficit. For the moment these inflows are more than enough to offset the deficit, but any number of factors could see capital flows reverse themselves. Which could mean trouble for SA, as it has a reserve surplus only equal to the value of three months of imports, not the recommended six months. Growth, like growth in the US is consumer driven, has not generated jobs, fixed capital investment or IT expertise. The savings rate is very low, foreign investment not forthcoming, which means the government has to step in and become the engine of capital expenditure, as it proposes to do under AGSI. But it is all very problematical and the fact that monetary policy is to allow the rand to finds its own market level has bred uncertainty, but more importantly, to this observer at least, leaves the management of the economy hostage to fluctuations in global markets, speculation (the JSE was one of the best performing stock exchanges in the world in 2005)

Labor Force Survey, September 2005, Statistics South Africa- Complete PDF report available online

5.2 Unemployment by population group

The variation in provincial unemployment discussed …reflects differences in natural resource endowments and also differences in the composition of the labour force in terms of the four major population groups. [Figure 7 and Table O show that] The unemployment rate according to the official [my itals] definition among black African people is higher than among Indian/Asian, coloured and white people by a large margin. For example, in September 2005, the unemployment rate among black Africans was 31,5% as against 22,4% among coloured people, 15,8% among Indians/Asians and 5,1% among white people (Figure 8). And as indicated in Table O, irrespective of population group, the unemployment rate among women – in particular Black African women – is substantially higher than their male counterparts.

This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. Return to the Nelson Mandela Centre of Memory site.