The unemployment crisis in South Africa is directly or indirectly at the root of all the country’s most serious social, economic and political challenges. The causes of the crisis – and what to do about it – are controversial subjects.
The official narrow unemployment rate in 2011 was about 25%. This is incredibly high by international standards.
Economic growth is essential for job creation. However the relationship between economic growth and employment growth in South Africa has weakened over time. This is a consequence of economic, legislative and regulatory pressures which have driven employers towards industries and production techniques that rely on more skilled people and less labour-intensive production methods.
Unless the employment intensity of growth increases, even very rapid growth will have to be sustained for many years if South Africa is to raise its employment rate to international levels. South Africa must find ways of increasing economic growth, sustaining this over many years, and ensuring that it is much more employment intensive.
One thing is clear: if rapid progress is to be made, some of the country’s most important constituencies will need to rethink many of the policy positions to which they have committed themselves. Negotiating this will require strong and courageous leadership.