‘Toxic recipe’: Only way beyond unemployment, poverty is to grow economy

The real problem in South Africa is growing the economy, an analyst said ahead of the State of the Nation Address (Sona) by President Cyril Ramaphosa last night.

In the third quarter of 2022, the unemployment rate in South Africa was 27.9%.

According to the Quarterly Employment Statistics survey released by Statistics South Africa (Stats SA), total employment in the formal nonagricultural sector had increased by 10 000 in the third quarter of 2022.

Unemployment levels too high

Chief economist at Efficient Group Dawie Roodt said without reading too much into the numbers, the economy was returning to normal levels.

Inflation rapidly went up because of the international energy crisis, food prices increased and the Reserve Bank tightened monetary policy.

“So there are a lot of things which happened in the economy. Employment and unemployment are affected by many factors, creating a lot of noise around the numbers,” he said.

“Even if we adjust through all this noise, unemployment levels in the country are just too high … dangerously high.

“The high levels of unemployment and rising levels of poverty are a toxic recipe about to be produced.”

ALSO READ: Sona: Ramaphosa declares national state of disaster with immediate effect

Job creation not the real problem

Back in 2020, the Presidential Employment Stimulus (PES) was established in response to the economic impact of the coronavirus pandemic.

It aimed to create jobs and strengthen livelihoods. It was understood in phase one of the PES, it was able to deliver over 540 000 jobs and opportunities in just five months, with the implementation of many of programmes still continuing.

According to Roodt, it was important to note Ramaphosa should not concentrate on job creation and unemployment because that was not the problem.

The real problem was economic growth.

“If you get 1 000 people to dig 1 000 holes and another 1 000 to fill them up again, you have not created 2 000 jobs, you have just kept 2 000 people busy. Those are not real sustainable jobs,” he said.

Fix the economy first

The emphasis, he said, should be on economic growth. Jobs would automatically follow.

“Politicians confuse real job creation with keeping people busy,” he said. “They think if you keep people busy, then you have created jobs when you really have not.”

Antswisa Transaction Advisory chief economist Miyelani Mkhabela said with the employment growth in the fourth quarter of 2022, there were signs that the deeply affected economy of the past 13 years was recovering slowly.

“The [International Monetary Fund] has reviewed the global economic growth and also highlighted that South Africa will get back to [being] the second economic dominance in sub-Saharan Africa in 2023,” he said.

Impact of energy crisis

With the energy crisis having had an extreme impact on businesses and job availability, Mkhabela said SA’s energy plan had the potential to solve the problem of the country’s unreliable electricity supply in the medium to long term.

“But they need to implement the set strategy, quickly appoint a new [Eskom] chief executive for good governance and accountability purposes and focus on the energy mix,” he said.

Meanwhile, as SA’s latest school leavers were considering fundamental life decisions about either entering the world of work or acquiring tertiary education.

In-demand jobs

Recruitment website Pnet.co.za’s job market trends report for the fourth quarter of 2022 showed there were many in-demand jobs which did not require a degree or tertiary qualifications.

The report provided an overview of SA employment and recruitment trends and was based on data from SaonGroup’s online recruitment platforms, which had over eight million registered users.

Having analysed about two million candidates’ records in their current roles, Pnet evaluated what qualifications were required in today’s job market.

It found many in-demand professions which required little investment in tertiary education, such as truck drivers, painters and home appliance installers.

Pnet’s research revealed local job market activity had decreased by 11% during the final quarter of 2022. Year-on-year, however, employment offers increased by six percent.