Work is vital for human life, not only for the income that it provides but also for the sense of structure and dignity it gives. Work provides a sense of identity and helps connect people, facilitating the sharing of knowledge and ideas — a vital reason why cities thrive. Work is also useful to obtain skills — often many things cannot be learned in a book or a lecture but must be experienced. Increased experience also decreases the likelihood of unemployment.
Given these factors, South Africa’s declining employment rate is very concerning. According to the World Bank, South Africa has the highest unemployment rate in the world, at 29%. This figure is much higher when accounting for those who have given up looking for work.
The data for South Africa’s employment figures is from the Quarterly Labour force Survey (QLFS) — a survey of 30 000 households. It only includes information for those between the ages of 15 to 64. This survey has many flaws, and it is only an estimate. However, the trends reflected in the data are likely true.
South Africa’s Unemployment Rate
South Africa's unemployment rate has recently reached its highest level ever, and though it has since declined somewhat, it remains very high. Youth unemployment — those between ages 15 and 34 — is significantly higher than the overall rate. The sharp decline in unemployment in 2020 is a result of how narrow employment is measured, with the drop likely explained by a large decline in the size of the labour force during the pandemic induced lockdown.
Total Employment
While South Africa’s total employment has increased somewhat close to the pre-covid peak, formal-sector employment has barely grown over the past decade. Meanwhile, the number of those unemployed and not in the labour force has grown. Currently, there are more unemployed — including those that have given up looking for work — than those with formal jobs in South Africa.
Trends in South Africa’s Employment Rate
After the two last global recessions, the employment rate — the number of employed divided by the size of the adult population — in the United States eventually recovered. In contrast, South Africa has suffered from sharp declines in the employment rate that has worsened with each subsequent recession. While the employment rate has increased a bit over the past two years, it is still below its pre-covid level.
South Africa’s declining employment rate has disproportionally affected the youth, with the sharpest declines seen in the youngest age groups of 15 to 24 and 25 to 34. This is concerning because it limits opportunities for young people to gain experience and skills.
South Africa is more educated than ever, with a large increase in the number of individuals with tertiary and secondary education. However, this increase in human capital is being wasted, as a lack of employment erodes the knowledge and skills of many. Increased education, however, increases the likelihood of employment, and the most educated have seen the lowest decline in employment rates.
Employment by Industry (Index)
The South African private sector employment trends show that most industries have seen periods of increased employment since the year 2000, except for manufacturing, which has consistently declined. Construction was, for a period, the fastest growing industry in terms of employment, but has declined in jobs since the year 2000 and has not recovered from the 2009 peak. Interestingly, the mining industry seemed to be somewhat immune from the 2020 covid recession.
Shifting the index 20 years back shows some interesting long-term trends. Since 1980, employment in the construction, manufacturing and mining industries has declined. While employment in ‘financial institutions’ has increased by a large amount, although it has stalled somewhat in the late 1990s. These trends are indicative of an advanced economy going through deindustrialization, rather than a developing country that still needs to grow.
Employment by Sector (Index)
The above graph shows that private sector employment has struggled to pass the peak in 2008 and is now far below it. Private employment in South Africa in the third quarter of 2022 is about the same as the first quarter of 2005, which is an incredible decline. While overall public sector employment decreased after the year 2000, possibly due to fiscal consolidation during the period, it increased by a large amount between 2005 and 2015. It seems like some of the recent increase in employment is driven by the public sector. This is not sustainable.
Conclusion
South Africa’s lack of employment growth is an incredible disaster. This is especially true for a country with so much unemployment, poverty, and inequality. This situation is even more dire for young people who are the hardest hit by the lack of job opportunities. While the youth are increasingly more educated, the employment rate for graduates has also declined. This lack of employment for the youth limits potential experience and skills obtained, networks being built and ideas to spread. It destroys the futures of millions and weakens the potential growth of South Africa’s economy.