Calls for urgent reforms to unlock jobs as South Africa’s unemployment crisis deepens

South Africa faces the world’s most severe and persistent unemployment crisis, with more than 12 million people actively seeking work, according to a new report by the Centre for Development and Enterprise (CDE) released on Tuesday.

The report, titled “South Africa’s Unemployment Catastrophe: A Call for Urgent Action,” paints a stark picture of an economy that has failed to generate sufficient jobs for nearly two decades.

CDE executive director Ann Bernstein said the figures reflect a long-term structural failure.

“For 17 years, 1 000 people have joined the unemployment queue every day. Over nearly two decades, South Africa’s labour force grew by 42 per cent, while total employment increased by barely 15%. The result: millions more work-seekers chasing far too few opportunities,” she said. 

This comes as the latest data from Statistics South Africa indicated that South Africa's official unemployment rate has risen to 33.2% in the second quarter of 2025, up from 32.9% in the previous quarter. 

Bernstein said the report identifies a range of “major failures” that have choked growth and stifled job creation — including the collapse of State-Owned Enterprises like Eskom and Transnet, a deepening fiscal crisis, widespread corruption, municipal dysfunction, and flawed economic transformation and industrial policies.

She said that each of these failures on its own would have slowed growth.

“Together, they have collapsed growth to little more than zero. When an economy doesn’t grow, nor does the number of jobs. Economic growth is by far the most potent lever for reducing unemployment,” Bernstein said.

The CDE report argues that public employment programmes — such as the Expanded Public Works Programme (EPWP), Community Works Programme, and the Presidential Employment Stimulus — can only provide short-term relief and are not a viable long-term solution.

Even on skills, the CDE said South Africa spends tens of billions of rand on skills development every year but outcomes are dismal.

Bernstein added that public employment schemes provide only temporary relief and will never generate the millions of jobs South Africa needs.

“In the past 15 years, both government and organised business have focused far more energy on special projects and youth initiatives that create a very limited number of jobs than on the hard work needed to achieve policy reform to create millions of market-based jobs,” she said.

According to the report, achieving sustained GDP growth of 4% per year could generate around 400 000 new jobs annually. Combined with reforms to make growth more labour-intensive, South Africa could create millions of new jobs within a decade.

The report added that the government needs to urgently introduce a serious package of reforms.

“South Africa’s labour market rules raise the cost of hiring and make it harder to employ unskilled and inexperienced workers. Our wage-setting machinery empowers large firms and unions at the expense of small businesses, while bargaining council agreements are extended to firms that never signed them,” reads the report.

The organisation is calling for a comprehensive package of reforms to remove barriers to hiring and make the economy more inclusive:

• Labour market reform: Amend the Labour Relations Act (LRA) to allow a 12-month probation period, limiting dismissal only for automatically unfair reasons such as discrimination. End the automatic extension of bargaining council agreements to firms not party to them, and exempt small and labour-intensive firms from such rules.

• Skills overhaul: Scrap the current SETA system and redirect funding to employer-driven apprenticeships and private training programmes aligned with business needs. Overhaul TVET colleges through results-based funding, curriculum reform, and stronger industry partnerships.

• Small business reform: Simplify regulations by allowing small firms to identify the most burdensome rules that hinder growth. Government should use this feedback to cut red tape and lower compliance costs.

• Support for the informal sector: Recognise the importance of the informal economy in job creation by consulting informal businesses when setting regulations, zero-rating trading licences, providing transport subsidies, and promoting urban densification to allow small enterprises to thrive.

Bernstein said South Africa’s institutional environment pushes up the cost of employment and locks millions out of work.

“We shouldn’t romanticise the informal economy, but we need to create more space for people to find their own livelihoods,” she said.

BUSINESS REPORT