1,000 jobs lost every day for 17 years in South Africa
South Africa is facing one of the world’s most persistent unemployment crises, and the country has lost thousands of jobs every day for 17 years.
This is according to the Centre for Development and Enterprise (CDE), which said that this is the result of years of government inaction, policy paralysis, and resistance to reform.
“More than 12 million South Africans want work but cannot find a job. For 17 years, 1,000 people have joined the unemployment queue every day,” said Ann Bernstein, executive director of the CDE.
“Despite this, the government continues to avoid the essential reforms that would change the country’s trajectory.”
In a new report, the CDE argued that the government’s reliance on short-term public employment programmes such as the Presidential Employment Stimulus and the Expanded Public Works Programme (EPWP) will never solve the problem.
“Public employment schemes provide only temporary relief and will never generate the millions of jobs South Africa needs,” said Bernstein.
“The country must start talking about what a labour-absorbing economy looks like, and what it would take to get us there.”
Over the past two decades, the country’s labour force has grown by 42%, but total employment has risen by only 15%. This imbalance has left millions more South Africans competing for too few opportunities.
The CDE’s report attributed this to a combination of factors, including the collapse of state-owned enterprises such as Eskom and Transnet, a deepening fiscal crisis, widespread corruption, failing municipalities, and poorly designed economic transformation and industrial policies.
“Each of these failures on its own would have slowed growth. Together, they have collapsed growth to little more than zero,” said the CDE.
“And when an economy doesn’t grow, nor does the number of jobs,” said Bernstein. “Economic growth is by far the most potent lever for reducing unemployment.”
The CDE also estimated that average economic growth of 4% could create around 400,000 net new jobs a year. Combined with bold reforms to make growth more labour-intensive, this could expand employment by millions within a decade.
The time to change course is right now
However, Bernstein warned that the country remains trapped by political indecision. “President Ramaphosa seems unable to make the tough choices necessary to grow the economy and create jobs for the millions of unemployed,” she said.
“The country desperately needs bold and resolute leadership willing to confront vested interests and embrace the changes that are required.”
To change course, the CDE has proposed urgent reforms focused on four key areas: the labour market, the skills system, small business development, and the informal sector.
According to Bernstein, South Africa’s rigid labour market rules increase the cost of hiring and make it more difficult to employ unskilled and inexperienced workers.
“Our wage-setting machinery empowers large firms and unions at the expense of small businesses,” she said.
“By the National Minimum Wage Commission’s own estimation, the national minimum wage has destroyed almost 100,000 jobs.”
The CDE recommended amending the Labour Relations Act to allow a 12-month probation period where dismissal is restricted only for automatically unfair reasons.
This would end the extension of bargaining council agreements to firms that never signed them and remove restrictions on labour brokers to create more entry points for workers.
Bernstein also pointed to South Africa’s “dysfunctional” skills system as a major contributor to unemployment.
“Every year, South Africa spends tens of billions on skills development, but the outcomes are dismal,” she said.
The CDE calls for scrapping the Sector Education and Training Authorities (SETAs), introducing employer-driven apprenticeships, and overhauling the Technical and Vocational Education and Training (TVET) colleges to align with business needs.
The report further argued that small and new firms should be at the centre of job creation, but are strangled by red tape and overregulation.
Bernstein said the country needs to move small business support, funding, and development to the private sector and away from the state.
The CDE proposed a bottom-up process where small firms identify the most damaging regulations, and a competitive, transparent process to fund private institutions that can promote dynamic entrepreneurship.
The CDE also noted that the informal sector, which plays a vital role in poverty alleviation, has been largely neglected or actively undermined by policy.
“South Africa’s institutional environment pushes up the cost of employment and locks millions out of work,” said Bernstein.
“We shouldn’t romanticise the informal economy, but we need to create more space for people to find their own livelihoods.”
The CDE urges the government to engage with informal firms when drafting regulations, eliminate trading licence fees, consider transport subsidies for traders, and promote urban densification to create more viable areas for informal business.
Loading ...