South Africa unemployment is worse now than at the end of apartheid

Unemployment in South Africa is now higher than it was at the end of apartheid, with almost one-third of the labor force out of work or discouraged.

This is according to a new report by the World Bank South Africa economic update: jobs and South Africa’s changing demographics, which says that the education system appears to have left the young unemployed ill equipped for a labor market that demands more skills.

At a time when almost half the population is under 25, unemployment among the young (15–24) is almost 50%, double the national rate.

According to World Bank, about 60%of the unemployed have not even achieved the matric qualification.

The report says that the country is in its demographic window of opportunity and will remain there for around 50 more years.

Since 1994, its working-age population (15–64 years) has increased by 11 million. In the next 50 years, it will grow by another 9 million, peaking in 2065 at about 43.8 million.

Read: SA unemployment is the economy’s fault: Zuma

The next 20 years alone will see an average net increase in the working-age population of about 280,000 people per year, although this does not necessarily translate one-for-one into an increase in the  labor force, given that many young people remain in education beyond their 15th birthday.

As a share of the working-age population, United Nations (2013) projects that the
peak will occur in 2045, when it will reach 68.3% of the population and there will be 2.1 working adults to support each young and old dependent.

Since 2000 however, the working-age population expanded by 8.5 million people, but jobs grew by only 2.8 million, the World Bank said.

Evolution of the SA labour market

Some 7.7 million people—about 22% of the working-age population—were unemployed or had stopped looking for work by 2014. The unemployment rate (on the narrow measure) was 25.4% or, if discouraged workers are included, the unemployment rate was closer to 34%.

Labor-force participation rates have also remained low, the report said. After initially rising post-1994 and peaking at close to 60% in 2000, labor-force participation rates fell to an average of 57.4% in the pre-crisis years between 2000 and 2008.

The global financial crisis resulted in the labor-force participation rate falling to 55% between 2009 and 2011, but it subsequently recovered to the 57% mark in recent years.

“Even so, by 2014 South Africa had one of the lowest employment and labor-force participation rates and highest unemployment rates by upper middle-income country standards.”

Total employment also became more skills intensive. In 2000, across all sectors, there were about four unskilled/semi-skilled workers to every skilled worker; by 2014 there were just three.

The the ratio of skilled to unskilled and semi-skilled workers rose by roughly 10 percentage points from 2000 to 2014, the report said.

“Insufficient job creation has left South Africa’s unskilled or semi-skilled and its youth facing the prospect of long-term joblessness, and they appear ill equipped for a labor market that demands higher skills.”

More job-intensive growth would help tackle unemployment and create jobs for
many new labor-force entrants in the coming 15 years, allowing South Africa to take
the first step in harnessing its favorable demographics, the report said.

“But simply increasing the number of jobs will not be enough to allow South Africa to boost savings and derive the second demographic dividend. More job-intensive growth needs to be accompanied as a first priority by improving the quality of education so that better educated youth are entering the workforce”

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