Poor governance, not bad luck, is behind SA’s jobs catastrophe
To address the crisis, SA needs a national government that works hard and doesn’t steal.
SA’s deepest and most fundamental crisis is the abject failure of the economy to create jobs. The figures are truly astounding: from January 2008 to December 2023 the number of working age adults rose by almost 9.5-million, while the number of people in employment rose by only 2.3-million.
This resulted in an increase in the nonworking population of 7.2-million to 24-million. As a result, the share of working age adults in work fell from 46% to 41%. To contextualise this: the proportion of adults who are working is almost a third lower than the global norm of about 60%.
The trends are even worse for young people. Since 2008 the population of people between 15 and 34 increased by 2.6-million, but the number of young people in work actually fell by 600,000. Among this category of youth, the employment-to-population ratio fell from 35% to 28%.
It is hard to see this as anything other than a jobs catastrophe, and it is one that can be explained overwhelmingly by the economy’s abysmal growth performance. This in turn is driven by the governing party’s policy failures, the collapse of critical state-owned companies, and wider governance failure. Combined, these factors have destroyed confidence and remain the most important obstacles to reviving investment and growth.
When you say this to people in and around the ANC, they will acknowledge the existence of the employment crisis, but deny its connection to its governance and policy failures. Instead, they will propose a variety of alternative explanations. Maybe it’s the consequences of the global financial crisis. Maybe it’s Covid. Maybe it’s just bad luck.
However, there is a way to test these claims. If the factors explaining the failure to create jobs were all outside SA’s control, it’s reasonable to think that they ought to affect all of SA equally. But they don’t. This is amply demonstrated by a comparison between the performance of the labour market in the Western Cape and Gauteng.
Since 2008 the growth in the working age population, at an average annual rate of just more than 2%, has been about the same in Western Cape and Gauteng. Yet over that period employment in the Western Cape has grown at about 1.9% a year. In Gauteng the figure is a fifth of that — a mere 0.4% a year.
(For the record, in the other seven provinces population growth was slower — less than 1.5% a year — and employment growth was about 0.8% a year, which is twice as good as Gauteng but still less than half the rate of growth in the Western Cape).
The divergence between Gauteng’s performance and that of the Western Cape widens if we look at a shorter period. Since 2015 Gauteng’s population has grown at 1.9% a year, but the number of jobs has fallen by an average of 0.1% each year. In the Western Cape, by contrast, employment growth has matched population growth at an average of 1.9% a year.
