|The limping economy of South Africa added over 40,000 new jobs this year but such an increase is not enough to keep up with the population growth / Photo by: South African Tourism via Flickr|
The limping economy of South Africa added over 40,000 new jobs this year but such an increase is not enough to keep up with the population growth. The latest (Q4 2019) labor force survey provided by Statistics South Africa (Stats SA) even showed that the unemployment figures remained unmoved at 29.1% and the number of discouraged job-seekers increased by 62,000. This means that there are now nearly 2.9 million people in South Africa who want and are available to work but believe there are no jobs for them.
Labor force survey in South Africa
The labor force survey likewise shows that there are 16.4 million South Africans employed in Q4 2019 and 6.7 million people unemployed. Although the number of people employed in the latest quarter increased by 45,000, the working-age population likewise increased by nearly 145,000 in the same period. This only means that the unemployment rate remains unchanged. The national statistical service of South Africa added that it is the first instance since 2008 that the country’s unemployment rate did not decrease in the last quarter of the year.
Stats SA highlighted the two sectors that have the largest increase in employment. These are the formal sector, which created 117,000 new jobs, and the agriculture sector, with 6,000 new jobs. On the other hand, informal sector employment declined by 77,000 in the latest quarter compared to the third quarter of 2019. There were also nearly 160,000 jobs lost in the wholesale and retail trade sector.
Multinational professional services network PricewaterhouseCoopers’ economists Christie Viljoen and Lullu Krugel said via South Africa Daily Mail & Guardian that it is “concerning” how employments are declining in the said sectors, especially now that the retail industry often has increased jobs during shopping periods in November for Black Friday and December for holidays.
|The labor force survey likewise shows that there are 16.4 million South Africans employed in Q4 2019 and 6.7 million people unemployed / Photo by: Medpro via Wikimedia Commons|
South Africa unemployment rate
Database company Statista shared South Africa’s unemployment rate from 1999 to 2019 as follows: 1999 (30.2%), 2000 (30.2%), 2002 (33.47%), 2003 (32.46%), 2004 (29.58%), 2005 (29.25%), 2006 (28.49%), 2007 (26.67%), 2008 (22.43%), 2010 (24.69%), 2011 (24.65%), 2012 (24.73%), 2014 (24.9%), 2015 (25.16%), 2016 (26.55%), 2017 (27.33%), 2018 (26.96%), and 2019 (27.32%).
After the labor force survey was released, Viljoen and Krugel said that the decline in the employment rate in the retail industry is a reflection of a decline in consumer spending or what households buy for their everyday needs. Private consumption includes both goods and services. The things that consumers purchase create a demand that consequently keeps firms profitable, thus, the need to hire workers. The low employment rate also brings consumer confidence into the negative territory.
Consumer spending and how it affects the economy
Financial platform The Balance shares consumer spending is one of the biggest determinants of the health of the economy. Even a small downturn in a country’s consumer spending is enough to create damage to the economy because the economic growth will slow down and the prices of goods and services will also drop. When it happens, it creates deflation.
Discouraged job seekers in South Africa
The International Labor Organization details that there were 705,000 (355,000 male and 350,000 female) discouraged job seekers aged 15-24 in South Africa in 2018. Among those 25 years old and above, there were a total of 1,726,000 discouraged job seekers.
Labor economist Gerhardus Van Zyl from the University of Johannesburg said that the number of discouraged job seekers in South Africa indicates that the private sector is not capitalizing on an additional productive capacity to hire more workers. To help solve the problem, he suggests urgent policy reforms to stimulate employment growth that will promote job creation. Van Zyl pointed out that the South African government is currently not in the financial position to create new jobs. So, they should shift their focus to small businesses and bring foreign direct investment (FDI).
Foreign direct investment, net inflows as a share of GDP
FDI is the investment made by an individual or firm in one country into business interests that are located in another country. According to Our World in Data, a scientific online publication that focuses on large global problems, South Africa’s FDI as a share of GDP in 2000 was 0.71% and increased to 0.96% in 2002, 2.17% in 2006, 3.37% in 2008. It went down again in 2010 at 1.55%, 1.21% in 2012, and 1.43% in 2017.
How to fix South Africa’s labor market
UCT Graduate School of Business’ associate professor of international political economy Mills Soko opined that several factors contribute to the unemployment problem of South Africa. These include the rigid labor market, the controversial practice of labor broking (a form of outsourcing), problems with the implementation and determination of minimum wages, problems in collective bargaining, and having policies that hinder the country’s efforts to achieve a higher rate of employment creation.
To fix South Africa’s labor market, he suggests tackling the abuse of hiring temporary workers, including those parts of labor broking arrangements. The second solution is to limit the expensive and highly inflexible system so it can protect employees against unfair dismissal. Thirdly, there is a need to overhaul the collective bargaining system. This can be done by re-introducing the two-tier bargaining that is done at both the plant and industry level. The last solution is to address the skills shortages that require rethinking the present vocational training system. “The labor market requires leadership and it needs real change,” Soko said.
Surprisingly, education plays a minor role in determining employability in South Africa. What plays an important role is prior work-experience, a study titled “South Africa: Labor Market Dynamics and Inequality” states. It concluded that although improved education outcomes in the country will help reduce the unemployment rate, offering work experience, whether that be formal or informal, holds the solution to lower the unemployment rate. This particularly applies to the most disadvantaged groups, such as blacks, women, and youth.
Maintaining job-search motivation and staying positive about the process is important to successfully land a job. Some tips for staying positive include focusing on things one can control, setting measurable goals, looking for opportunities to volunteer, identifying the problem, networking with the right people, and turning the job hunt into a game. Searching directly for companies instead of jobs is also something that many job seekers overlook but is a move that can put them in the right direction.
|Maintaining job-search motivation and staying positive about the process is important to successfully land a job / Photo by: The Wot-If Trust via Wikimedia Commons|