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Worry over SA's stubborn unemployment rate

Cape Town - South Africa’s growing unemployment rate is a source of great distress for trade union Solidarity, which expressed shock on Friday following the release of the latest figures.

Statistics South Africa reported that unemployment in its broad definition increased in the first quarter of 2017 to 36.4% from 35.6% in last quarter of 2016. This means an estimated 9.3 million people in South Africa want to work, but don’t have work.

READ: SA unemployment rate rises to 14-year high

It is particularly worrying that unemployment has not come down even amid more favourable macroeconomic conditions that prevailed during the first quarter of 2017, said economics researcher at the Solidarity Research Institute (SRI) Gerhard van Onselen.

“The first quarter of 2017 coincided with, among other things, a stronger rand and higher international commodity prices.

 “Even under those more favourable conditions in the first quarter of 2017, employment could not grow sufficiently to reduce unemployment in the least; on the contrary, it increased,” Van Onselen said.

This is indicative of an economy that is inhibited on a large scale by a harmful policy, he said.

“Due to the ANC’s economic policy, the market is unable to perform in such a way as to adapt to new macroeconomic realities,” he explained.

READ: Low growth to weigh heavily on jobs – analysts

“Investment is discouraged by policy uncertainty and harmful policies that increase the risks associated with private enterprise. This means that production and associated employment are largely suppressed,” Van Onselen added.

According to him, one of the government’s policy blunders is the proposed national minimum wage, which he said is applicable largely to a young and low-skilled population of working age.

“It is self-evident that it will create a further barrier for young and low-skilled persons to enter employment. Unemployment figures in respect of the younger age groups are already disconcerting – 41% for those in the age group of 25-34 years,” Van Onselen argued.

“The fact is that the current policy, with an increasing focus on ‘radical economic transformation’ is inhibiting the possibility of a vibrant economy and the strong employment that should result from it.”

Under these circumstances, he said, the SRI does not expect the country’s unemployment rate to improve significantly.

“What is called for is that government should radically do away with harmful policies that fly in the face of freer markets. This has to be done so the market can start performing again in order to save South Africa from further economic decline,” Van Onselen suggested.

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