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DESPITE dropping slightly from 26.4% to 25% in the second quarter of this year, South Africa’s unemployment rate is still exceedingly high by global standards.
This week Statistics SA released the Labour Force Survey for the second quarter of 2015, which is specifically designed to measure the dynamics of employment and unemployment in South Africa.
Kevin Lings, a senior economist at Stanlib, this week said that according to the expanded definition, the unemployment rate in this country is actually 34.9%.
Lings said according to the expanded definition, the unemployment rate for the youth (younger than 25) is at an incredible 63.1%.
This is worrying.
For many years, South Africa was accustomed to an unemployment rate hovering between 20% and 25%, depending on the nature of negative jolts that knocked the economy and the policy responses to those tremors.
But that could be fixed, according to the ruling ANC.
ANC gurus, those who compiled the government’s economic blueprint, the National Development Plan, are targeting a jobless rate of 14% by 2020 and 6% by 2030.
Economists believe that given current levels of unemployment, a great deal of work needs to be done to achieve these jobless rates. Others believe that this may not be achieved because the current numbers do not include the impending job cuts in South Africa’s mining sector.
This is true. Last week platinum miner Lonmin [JSE:LON], which employs 39 000 people, said it is planning to close or mothball several mine shafts, putting 6 000 South African jobs at risk. It cited depressed metal prices as the reason for this move. Another mining firm, Anglo American [JSE:AGL], is also planning to cut 6 000 jobs.
This means that the next time we check the jobless numbers, they should be back to where they were before the second quarter of this year.
The causes of this continued surge in unemployment must be understood if it is to ever fall back from current numbers.
The slow pace of economic growth in South Africa is one of the most important determinants of the rising rate of unemployment.
There is simply not enough economic activity in South Africa to prevent a critical part of our growing population from going straight into unemployment.
I personally believe that the composition of South Africa's annual real gross domestic product growth needs to be maintained at between 4.5% and 6% if there are to be enough jobs created to cover a satisfactory number of people in the country.
The solution is to have in place policies that will fire up the economy so that GDP growth can be sound for a couple of years.
The issue for the 5.2 million people who are currently unemployed should be about the policy response rather than politics.
If politics win out and the policy settings fail, it is likely that by the time of the next national general election the ranks of the unemployed would have swelled.
That’s not all.
With South Africa’s mid-term budget policy statement only three months away, intensifying the case for job-creating fiscal stimulus should be carefully deliberated.
*Mzwandile Jacks is an independent journalist. Opinions expressed are his own.
