Recent employment trends

Employment increased from 9.8 million jobs in 1995 to 13.2 million jobs in September 2007 and declined to 12.8 million jobs in 2009. The period of rapid growth led to the creation of 1.8 million net new jobs, almost entirely in retail, construction, the public services and lower-level private services such as security. As a result, the share of working-age adults earning some kind of income climbed from 39.4 percent in September 2002 to 44.7 percent in the third quarter of 2008.

Between 2003 and 2008 the number of jobs created began to outstrip growth in the labour force. The official unemployment rate which peaked at 31.2 percent in March 2003 – fell to 23 percent in 2007, despite the fact that the economic upturn had encouraged more people to look for work. As a result of the recession, the unemployment rate rose to just above 25 percent in 2010.

Two features marked employment patterns in the post-2001 period. First, some low-skill sectors such as construction, retail and the private security industry grew quickly. Second, a very large proportion of young people simply could not break into the labour market, despite the fact that they are more educated than older workers. In just a decade, the proportion of school leavers able to get a job fell from 50 percent to less than 30 percent.

About two-thirds of all unemployed people are below the age of 35. About 65 percent of black youth are unemployed.

The proportion of jobs in the services sector grew from 55 percent in 1970 to about 70 percent by 2004. The growing proportion of services employment is a global phenomena, and certainly not unique to South Africa. It is mostly caused by the different rate of productivity growth between goods production and services. It also arises as the economy modernises and diversifies. However, it can also be caused by constraints on the expansion of goods production, as is the case in South Africa. This can be ascribed to low productivity in manufacturing, currency volatility as well as high fiscal deficits, low savings, high interest rates and greater international isolation during the last two decades of apartheid. The extent to which goods or services could spur growth rests considerably on policy choice. Although services have traditionally been seen as merely supportive of other activities, a growing proportion of global trade and investment is now found there. It is worth noting that services account for a growing proportion of South Africa’s exports.

Social grants have played an important role in the decreasing income poverty since 2001. Yet inequality has not been reduced. Using an income poverty line of R322, absolute poverty declined by five percentage points, from 53% in 1995 to 48% in 2005. Most of this decline took place after 2000, during the period of higher economic growth and more rapid expansion in access to social grants. The Gini coefficient has gone up slightly, hovering around a high level of about 0.67 for much of the post-apartheid period.

Growth in GDP per capita (which averaged less than 1 percent a year in period 1994 to 2003), has averaged 2.4 percent since 2003 (3.7 percent between 2003 and 2008). For the poorest 10 percent of the population (using AMPS data-constant 2008 prices) monthly income increased from R783 to R1 041, while for the richest 10 percent of the population it increased from R71 055 per month to R97 899 for the period 1994 to 2009.

The economy remains biased towards capital- and skills-intensive sectors. Low skilled people are losing jobs in sectors such as mining and agriculture. Because of the skills constraint, skilled workers’ salaries rise disproportionately and the income gap between skilled and unskilled workers widens.

As a result, the richest 10 percent of households receive more than 40 percent of the national income, compared to just over 30 percent in most other upper-middle income countries. The average household income in the former Bantustans, which are home to 30 percent of the population, is about one-third that in the metropolitan areas, and joblessness remains very high.

Remuneration as a share of GDP has fallen by 4.7 percentage points in the period 1994 to 2009 relative to the long-term average.

Inequality is high for several reasons. First, large numbers of people have no income. Second, among working people, wage inequality is high, largely reflective of the distribution of skills and education. Skills shortages push up wages for skilled workers, while low levels of education and low productivity depresses wages in many sectors.

Overview of the extent and nature of the unbuilding - (463KB)