Cape Town – Education and skills shortcomings are at the heart of South Africa’s employment crisis, said Finance Minister Pravin Gordhan in his 2017 Budget Overview on Wednesday.
“The economy continues to create opportunities for semi-skilled and skilled workers, while at the same time shedding jobs in unskilled areas. This exacerbates poverty and inequality and widen(s) the wage gap,” Gordhan said.
In the fourth quarter of 2016 unemployment was 26.5%. Jobs in the mining and manufacturing sectors declined by 80 306, while the services sector by contrast created 119 189 jobs over the same period.
Unemployment among 18- to 29-year-olds averaged 43% in the fourth quarter. About 7% of university graduates are unemployed, compared with 27% of people in the age bracket who have completed only matric.
“University graduates have far greater employment potential than those who have only obtained a matric certificate. The lack of opportunities to enter the workforce to gain experience, coupled with poor school education and limited networks, consign many young jobseekers to long-term unemployment.”
Gordhan expects improved labour relations to boost employment growth. The agreement on a minimum wage of R20 per hour (supposed to be introduced in May 2018) and reforms on the labour front to resolve disputes more effectively to minimise protracted and violent strikes will also create more certainty in the labour market.
Household consumption
Household spending is projected to increase by 1.3% this year and 2% in 2018 in response to moderate employment growth, a slight uptick in consumer confidence and lower inflation, Gordhan said.
With low levels of consumer confidence, households are reluctant to take on new debt. The number of credit applications has fallen and credit extension growth has been slow.
The ratio of household debt to disposable income declined to 74% in the third quarter of 2016 from 76.9% in 2015. Although the drop in household debt has reduced consumption growth, over time it should create conditions for more sustainable household expenditure patterns, Gordhan said.
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