South Africa’s unemployment crisis is the deepest and most persistent in the world, owing to 40 years of slow economic growth, a skills shortage, and poor policy choices.
Currently, 38.5% of the workforce is unemployed, up from 31% at the start of 2008. Since then, the working age population has increased by seven million people, but fewer than two million have found work.
The primary reason for high unemployment is slow economic growth. For the past four decades, the economy has not grown quickly enough to absorb new jobseekers.
Policy choices have created a negative impact on employment and growth. Government needs to rethink industrial policy, employment legislation, and wage-setting practices. These have had the effect of raising the cost of labour for firms, making it more difficult for new firms to be established and sustained.
Far too many people live in rural areas where there is little prospect of meaningful economic development. Better urban policies are desirable because they will boost growth. This will also draw in more people who currently live in places in which there is no plausible path to prosperity.