The rising unemployment rate should serve as a catalyst for action, says the author. Photo: File
By Portia Thokoane
The recent surge in South Africa’s unemployment rate reaching 33.5% in the second quarter of 2024, serves as a stark reminder of the significant challenges our nation faces. This troubling statistic, coupled with the losses in key sectors such as trade and agriculture, underscores the need for a more robust approach to job creation and economic reform, and the creation of entrepreneurship opportunities for youth as we navigate a period of political transformation, and economic uncertainty.
Despite the addition of 1.8 million jobs since the start of 2022, the labour force has expanded by 2.2 million, resulting in a significant increase in the number of people unable to find work. This discrepancy highlights a persistent structural issue within the economy, where traditional sectors that once absorbed unskilled and semi-skilled labour – such as trade, agriculture, and construction – are now shedding jobs.
The manufacturing sector, despite a modest gain of 49 000 jobs is not sufficient to offset the broader losses in the economy.
Businesses must play a critical role in addressing these challenges. The rising unemployment figures, particularly in sectors that have traditionally been pillars of the economy, signal an urgent need for innovation and collaboration between the public and private sectors. The decline in agricultural employment is particularly concerning, given that this sector is not only a key source of jobs but also integral to the nation’s food security and rural development.
Stanlib’s chief economist, Kevin Lings, has noted that the rise in unemployment is persistent despite improvements in electricity production, indicating that business confidence remains low. Companies are focusing on cost-cutting measures rather than investing in growth and expansion, which points to a broader issue extending beyond the immediate economic environment and highlights the need for a concerted, long-term strategy to revitalise South Africa’s economy.
Statistics South Africa also reports a troubling increase in discouraged work-seekers, with the expanded definition of unemployment rising to 42.6%. This trend reflects a growing sense of disillusionment among the working-age population and serves as a call to action for all stakeholders to intensify efforts in creating meaningful employment opportunities that can reinvigorate the labour market.
The structural unemployment problem is particularly acute among younger South Africans, with alarming unemployment rates of 60.8% for those aged 15-24; and 41.7% for those aged 25-34. The Bureau for Economic Research (BER) has highlighted that while tertiary sectors such as trade and finance are growing, they are not equipped to absorb the country’s unskilled and semi-skilled labour force. This mismatch between the skills required by the economy and the skills available in the labour market is a critical challenge that demands urgent attention.
The new governing alliance’s focus on economic reform and job creation is a positive step, but it is clear that the private sector must be an active participant in this process. For over a decade, South Africa’s economic growth has been stifled by factors such as load shedding which, despite recent improvements in Eskom’s performance, remains a barrier to sustained growth. Businesses, including ours, must continue to innovate and invest in solutions that address these systemic issues.
The private sector, while cautious remains a vital partner in this endeavour. As Busisiwe Mavuso recently highlighted, the commitment from the Department of Trade, Industry, and Competition (dtic) to engage with the private sector is a positive development. However, for this partnership to be effective, there must be a clear and stable regulatory environment that fosters business confidence. Streamlining regulations, clarifying industrial policies, and ensuring greater transparency between the dtic and the private sector are crucial to creating the conditions necessary for investment and job creation.
The current unemployment crisis presents an opportunity for South Africa to rethink its approach to economic growth. By focusing on sectors with high potential for job creation, such as the green economy, and by aligning educational outcomes with the needs of the labour market, we can begin to address the structural challenges that have plagued the economy for years.
In conclusion, the rising unemployment rate should serve as a catalyst for action. It is a call to all stakeholders – government, business, and civil society – to come together and create a sustainable, inclusive economy that provides opportunities for all South Africans.
The path forward requires collaboration, innovation, and a relentless focus on creating jobs and entrepreneurship opportunities that can lift millions, especially our youth, out of poverty and into active economic participation.
Portia Thokoane, human resources director, Nestlé East & Southern Africa Region
BUSINESS REPORT