South Africa's million jobs target: A fading dream amid stalled growth

With government and the private sector’s ambitious target of 3% gross domestic product growth (GDP) exceedingly out of reach, its target of adding another million jobs to the economy is now a pipedream.

Based on findings from Statistics South Africa’s latest figures on economic growth, of 0.8% in the second quarter, economists are now putting full-year gains at anywhere between 0.9% and 1.2%.

This compares badly with National Treasury’s expectations of 1.4% - and even that figure is nowhere near the 3% Operation Vulindlela 2.0 is aiming for this year.

If South Africa somehow hits the 3% target, adding a million jobs, the unemployment rate will drop from the current 33.2% to 29.2%. This figure, however, still excludes discouraged workers.

Information from CEIC Data shows an all-time high unemployment rate of 35.30% in December 2021 and a record low of 21.50% in December 2008.

To even get below 25%, two million more jobs would have to be created, IOL's calculations show.

Investec chief economist Annabel Bishop said in a recent note that, to even to get to 0.9% will mean GDP gains of 1.2% year-on-year in the second half. This means, she said, that the quarter-on-quarter 0.8% gain in the second three months of the year was a “flash in the pan”.

Year-on-year, the economy grew 0.6%.

“We continue to forecast South Africa’s growth outlook for this year at 0.9% year-on-year, with risks to the downside from an underperformance of the highly volatile agricultural and transport sectors, but the potential for faster growth on improvement in the latter,” said Bishop.

Thanda Sithole, FNB Senior Economist sees growth a touch higher, at 1%.

“While US tariffs and trade uncertainty weigh on projections, growth is supported by a benign domestic inflation environment, cumulative interest rate cuts with further reductions expected from late 2026, and ongoing structural reforms in network industries,” Sithole said.

Old Mutual chief economist, Johann Els, is more optimistic.

“Overall, the data is consistent with my full-year growth forecast of 1.2%. I expect the second half of the year to be somewhat softer than the first – weighed down by US trade tariffs and associated job losses – but supported by low inflation, lower interest rates, and the gradual easing of structural bottlenecks in electricity and logistics,” he said.

For context, National Treasury's latest forecast (from the May 2025 Budget) projects South Africa's GDP growth at 1.4% for 2025, with forecasts for subsequent years of 1.6% in 2026 and 1.8% in 2027.

IOL