Unemployment increased over the past 30 years. Will GNU change that?

Research has shown that unemployment in South Africa has only worsened since 1993, marking South Africa as one of the few countries in the world where the unemployment rate exceeds 20%.

Recent research by the Bureau for Economic Research (BER) compares the state of unemployment in the country between 1993 and 2023 and the results align with President Cyril Ramaphosa’s statement during the opening of parliament speech when he spoke about the relationship between employment and the economy.

BER report findings

“Our experience over the past 30 years has shown that when our economy grows, jobs are created. When our economy contracts there is no job creation and jobs are lost.”

Many eyes have been on the newly-formed Government of National Unity (GNU) about its plans to help reduce the high rate of unemployment. GNU itself has marked “inclusive growth and job creation” as one of its three strategic priorities.

The BER said between 2003 and 2008 annual job growth averaged smaller than 3%, which led to the global financial crisis and pre-Covid years, while 2011 to 2019 specifically faced slower economic growth, which translated into slower job growth. In 2020, the Covid pandemic had a major impact on job opportunities.

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Rural areas have highest unemployment

In 1996, the rate of unemployment sat at below 20%, while in 2023 it was 32%. Most jobs have been lost in construction and manufacturing over the past years. When it comes to provincial unemployment statistics, Ramaphosa’s statement that jobs are lost when the economy contracts can be seen in the Eastern Cape.

The province has entered a technical recession after its economy contracted for the third consecutive quarter. Most jobs in the province were shed in construction, manufacturing and mining industries. Only agriculture and electricity saw growth.

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Stats SA said the unemployment rate in the Eastern Cape rose to 42.4% in the first quarter of 2024, with 77 000 jobs lost in the same period. Even some of the government employees lost their jobs.

The BER’s research shows that high unemployment is mostly found in rural provinces, which could be the largest reason more people move to the cities to find employment. It also shows that 3.17 million people were discouraged from looking for employment in 2023. 

Tertiary sector accounts for most employment

Employment in the public sector also grew from 1.3 million in 2003, to 2.1 million in 2023.

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Tertiary sectors are the largest employers in the country and it seems they are experiencing the fastest employment growth.

“However, the sector is unable to absorb the country’s stock of unskilled and semi-skilled labour, because demand from the manufacturing and construction sectors has declined. This highlights South Africa’s structural unemployment problem.”