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With the elections now largely behind us, investors’ focus will shift to President Cyril Ramaphosa’s ability and political will in addressing issues of concern, namely: the composition of cabinet to be announced on the 28th of May, transforming the economy with the promised policy reform and resolving the problem that Eskom poses to South Africa.
Stats SA recently announced South Africa’s unemployment rate has increased to 27.6%. The expanded rate increased to 38%, which translates to 9,994,000 unemployed people.
During the first quarter of 2018, South Africa’s gross domestic product (GDP) decreased by 2,2% according to Stats SA. This low growth trap followed a period of cautious optimism and highlights the need for creative thinking from all role players in the economy.
Reality can be avoided for only so long. The South African economy has slipped into its first technical recession since 2009. Cyril Ramaphosa’s confidence in growth for the economy has proven hollow. Without a change in the size and the amount of control the state has grasped over the lives of South Africans, without a change in policy from socialism to free markets, this recession was inevitable.
As unemployment in South Africa jumped to 27.2% for Q2 2018, the proverbial walls seem to be closing in on job seekers. The strain of this appears to be intensified among the youth who account for 63.5% of the total number of unemployed persons,irrespective of education level.
While unemployment and poverty remain some of South Africa’s biggest threats, our centralised collective bargaining model, which culminates in bargaining councils extending agreements to non-parties, remains the biggest deterrent to employment in affected industries.
The unfettered liberty for individuals to pursue their socioeconomic aspirations so long as there is no force or fraud entailed in their endeavours should be the cornerstone and point of departure for all government policies. This principle should also be the litmus test in reviewing existing policies in order to expunge bad ones from the statute books.
Is South Africa headed down a road of jobless growth where a capital-intensive economy is incompatible with a labour-intensive need? According to an International Labour Organisation (ILO) report reviewed in Forbes Magazine, 11 August 2017, there are about 71 million unemployed 15 to 24-year-olds around the globe, many of them facing long-term unemployment. This is close to a historic peak of 13%.
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