• IS provokes sea-change

    It has been a grave mistake to defy both Russia and France, says Leopold Scholtz.

  • Nene's SAA nemesis

    No political figure seems to have the guts to speak out against Dudu Myeni, says Solly Moeng.

  • The mp3 revolution

    Ian Mann takes a look at the war between digital music and the compact disc.

All data is delayed
See More

Growth path on wrong track - study

Oct 02 2011 10:47

Johannesburg - The government has not created the right climate to achieve the targets of the new growth path economic strategy, according to a study by the Bureau of Market Research (BMR) at Unisa released on Sunday.

"It became clear that the conditions created by government do not favour the achievement of the stated targets,"the BMR said in a a statement.

The new growth path (NGP) aims to increase economic growth to sustainable rates of between 6% and 7% a year in order to create five million jobs by 2020. This would reduce the unemployment rate to 15%.

Official unemployment in the second quarter of this year, according to Statistics SA, was 25.7%.

For higher economic growth to translate into more jobs, economic growth needed to be labour absorptive.

The researchers - Professor Carel van Aardt, Professor André Ligthelm and Johan van Tonder - looked at whether this would happen in South Africa.

They found that employment growth was negative in five of the 10 years between 2001 and 2010, while only one year of negative economic growth occurred.

"Employment in especially the agricultural and mining sectors suffered, each registering seven negative employment growth years," the BMR said.

They came to this finding through analysing the relationship between gross value added (GVA) - a measure of the value of goods and services produced in an area, industry or sector - and employment per sector.

The researchers also found a weak relationship between GVA and employment creation in most of the sectors.

"This implies that factors other than economic growth have a major impact on both job creation and job destruction in South Africa," the researchers said.

This could be due to employers favouring capital over labour in production.

"Higher economic growth, for example of 7%, will thus not automatically translate into the creation of 5 million jobs," the BMR said.

"Should this preference for capital persist, economic growth rates of more than 10% per year might be necessary to create the 5 million jobs."

The researchers calculated a capital to work ratio to see whether the sectors the NGP was focusing on would create jobs.

The NGP had identified utilities, transport and communication, construction, agriculture, mining, and manufacturing as sectors which could create jobs.

The researchers found a major shift away from workers to capital in all but one of the economic sectors.

"Interestingly, in all the sectors identified by the NGP to be or become labour absorptive, a preference for capital over labour has developed since 2000. In fact, only in the financial sector did the capital-worker ratio decrease." 

sa economy  |  new growth path



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


Marketing is a big concern in SA's small business community, followed by a lack of confidence and partnering with the wrong people, according to a survey.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The 25 basis points interest rate increase is:

Previous results · Suggest a vote