South Africa

Unemployment to rise until GDP reaches 4% – analyst

South Africa is unlikely to reduce unemployment by the end of President Cyril Ramaphosa’s term in office, even with the government of national unity (GNU) that he leads.

Ramaphosa, in his weekly newsletter yesterday, said there was a marked increase in “confidence in the direction of our country”.

Unemployment rate will remain high

However, political analyst Sandile Swana was of the view that with the South African Reserve Bank (Sarb) statistics indicating that the gross domestic product growth rate would be 1.6% in 2026, there was no hope that the Ramaphosa-led 10-party coalition would make a dent in the country’s unemployment by the time the GNU’s term ended in 2029.

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“Ramaphosa is going to go out of the presidency not having achieved much. Until the GDP growth rate reaches 4% you are still not able to reduce unemployment,” Swana said.

He said each year from December 2024 to December 2026, the unemployment rate would increase rather than go down.

Beyond that period, which would be the remaining three years of the GNU term, there was no hope things would improve, either.

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The South African economy strengthened by 0.4% in the second quarter (April-June) of 2024 due to finance, manufacturing, trade and electricity, gas and water supply industries on the production supply side.

Even with the DA as a major partner in the GNU, the country would not be able to slow down joblessness in the country.

“The DA has not been able to reduce unemployment in the Western Cape. It has actually increased it faster than any other province,” Swana said.

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Prof Bonang Mohale, chancellor of the University of the Free State, said only if business worked much more closely with the GNU would unemployment be reduced.

“It might be able to accomplish that by being seen and experienced as a trusted advisor, partner of choice and doing everything possible to ensure that this GNU government is a capable state.

“Purely because business is South Africa’s last chance,” Mohale said.

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Unemployment is linked to South Africa’s inequality

Another political analyst, Lukhona Mnguni, said the major parties in the GNU need to come up with a political understanding of inequality in the country and a collective political response to address it.

“If you don’t deal with inequality in this country, it becomes difficult to deal with anything else, whether it’s violence, unemployment, the digital divide, the question of intra-migration, education delivery and so on.

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“For the economy to grow it must grow at a fundamental rate that transforms people lives, which is what the GNU should achieve.

“It should give them jobs, it has to lessen poverty and make a difference in people’s lives,” Mnguni said.

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Another analyst says structural reforms are needed

Political economy analyst Dale McKinley said: “We need structural reforms in the South African economy.

“You may have a certain amount of growth but the question is growth for whom or who is to benefit.

“So I don’t see the GNU moving away from the macroeconomic programmes that have previously been there. There will be nothing radically different.”

He said the GNU could probably stabilise the capitalist economy and basically reassure investors.

That would see an increase in positive sentiments resulting in a little bump up and some productivity.

“There might be as well as “some kind of job creation around certain projects particularly infrastructure and maybe some private sector investments.

“Those would be minimal and they won’t impact on the fundamentals of unemployment situation,” McKinley said.

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By Eric Naki
Read more on these topics: jobsunemploymentunemployment rate