Unemployment: our biggest problem
We are taking an in-depth look at the issue South Africans are most concerned about
In survey after survey, South Africans rank unemployment as the country’s biggest problem. Solutions to reduce the high number of people out of work are not easy to find. Over the next weeks, GroundUp will be putting unemployment in the spotlight. Unemployed people will describe the hardships they face, and leading economists will analyse the problem.
The unemployment rate rose from 21.5% in 2008 to 27.1% in 2018. Long-term unemployment — people looking for work, but who have not worked for a year or more — is consistently high: 4.4 million in the fourth quarter of last year.
Professor Vimal Ranchhod, an economist at UCT, says, “Long-term unemployment leads to unfulfilled human potential over a lifetime and can affect people’s sense of self worth and cause depression. Poverty rates are higher and this affects individuals, their families and their communities.”
The long-term unemployment rate includes only people actively looking for work. That it is so high suggests there is real awareness and effort among South Africans to find work, and there is data that substantiates this.
Afrobarometer asked a representative sample of about 1,800 South Africans in August and September 2018 what they think are the most important problems facing South Africa that government should address. Unemployment was by far the most pressing issue. Well over half those asked (62%) said government should make reducing unemployment its main priority. This was ahead of crime, housing, and education.
South Africa is not faring well on a global scale either. According to Haver Analytics (as cited by The Economist), South Africa has the highest unemployment rate amongst the BRICS nations, more than double that of Brazil (11.6%) and considerably higher than that of India (7.1%), Russia (4.8%) and China (3.8%).
The five industries that employed the most people in the fourth quarter of 2018 were community and social services, which includes government employees (3.6 million); trade (3.3 million); finance and other business services, which includes insurance, real estate, auditing and such-like (2.6 million); manufacturing (1.8 million) and construction (1.5 million). Together these five industries employ 76% of the working labour force.
Despite this, millions of South Africans remain poor, unemployed and desperate. Even many people with matric and tertiary qualifications are not spared the hardship. Economists give many reasons for our high unemployment rate: a relatively small manufacturing sector, inadequate education, poor economic policies, and inequality. Over the coming weeks we will delve deeper into these issues.
Employed: People aged 15 to 64 who, during the week they are surveyed, worked for at least one hour
Unemployed: Peopled aged 15 to 64 years who:
- Were not employed in the week they were surveyed; and
- Actively looked for work or tried to start a business in the four weeks preceding the survey interview; and
- Were available for work, i.e. would have been able to start work or a business in the survey week; or
- Had not actively looked for work in the past four weeks, but had a job or business to start at a definite date in the future and were available.
Labour force: People aged 15 to 64 who are able to work
Unemployment rate: proportion of the labour force that is unemployed.
Not economically active: People aged 15–64 years who are neither employed nor unemployed in the survey week.
Discouraged work-seeker: A person who was not employed during the survey period, but wanted to work but did not take active steps to find work during the last four weeks.
Informal sector (non-agricultural): The informal sector consists of:
- Workers in businesses that employ fewer than five employees and that do not deduct income tax from salaries; and
- Self-employed people (or people doing unpaid housework) who are not registered for either income tax or value-added tax.
Formal sector (non-agricultural): People not employed in the informal sector, agriculture or by private households
Labour force participation rate: Proportion of the working-age population that is actually working.
Source: Statistics South Africa translated into plain English
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I certainly sympathise with those who can't find work, or can't get work that brings in enough to live on, but I don't think unemployment is S.A's biggest problem. I think that title has to go to Eskom.
My reason for that order? If Eskom gets fixed, a stable, adequate power supply will allow businesses to become profitable, new businesses to survive, and that kind of economic growth will make possibilities for more jobs, more employment. How could solving unemployment fix Eskom? It couldn't.
Addressing unemployment on a large scale first is putting the cart in front of the horse. In small scale businesses, those that don't depend heavily on electricity, like growing organic vegetables & selling them, you can develop your own job. Or if you make things people need and sell them. But large scale services & manufacturing depends on having enough power whenever it is needed, and that's where large-scale job growth starts.
Some people may say that Eskom's problems started with corrupt top management, and therefore the country's biggest problem is corruption. Fair enough, but in my model, part of the fixing is getting competent, honest staff-- that's integral to the solution.
Get Eskom working, reliably, efficiently, and the job market will grow.
You should have included the 5.55 percent of the total workforce employed in commercial agriculture - over 850,000 employees in South Africa who were active in the formal agricultural sector in 2017.
Although these numbers have declined because of drought, there are many more employed temporarily in Agriculture and many more still employed in the small farm sector which falls outside of the definition of "commercial agriculture". On my farm I employ three people full time and and about four or five seasonally. There are many such farms that are in fact producing commercially but are not counted as part of "commercial agriculture" .
In the Ranchhod article he points to low levels of investment are a result of high levels of risk and uncertainty, and a trust deficit. Wealth is unevenly distributed in South Africa. So is management skill and entrepreneurial capacity. I never understood the importance of risk taking, of watching every cost and every aspect of your production process like the proverbial "hawk" until I started farming. The entrepreneurial manager weighs every decision very carefully fully aware that you have to make a decision in a given time frame and either move forward or lose the opportunity.
Until SA evolves to a point where entrepreneurs and good managers are supported regardless of ethnicity, are encouraged to take on apprentices, to share skills, to train, to support employee share ownership and cooperative forms of production - we will not see the return of investment and employment.
For this to happen we need a reform of the state. We need an honest, capable state. Is it too late? I don't know, but for the sake of us all, I want to believe it's not to late.