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Friday, 02 August 2019 10:33

We must accept that South Africa's economy is in crisis

The jobless rate in South Africa rose to the highest in at least 11 years, according to Statistics South Africa’s current data series that starts in 2008 and is based on a quarterly survey. It gets worse: earlier biannual data published by the agency suggests that unemployment is now at the highest since 2003, when it was at 31.2%.

The latest increase was partly because 150 000 additional people reached working age and the number of people classified as discouraged work seekers or not economically active dropped by more than 300 000, which means they were included in the official jobless rate. Still, the expanded definition of unemployment, which includes people who have given up looking for work, increased to 38.5% from 38%.

President Cyril Ramaphosa pledged to boost growth to 5% by 2023 when he was campaigning to become leader of the ruling African National Congress two years ago. This is also the rate that the National Development Plan, the government’s 2012 economic blueprint that Ramaphosa co-authored, says is needed to reduce joblessness to as little as 6% by 2030. According to central bank forecasts, expansion will only reach 2% by 2021.

New population estimates show there are 58.8 million people in South Africa. Almost 30% of them are younger than 15 years and will enter the labor market in the next decade.

Job losses are likely to continue: Business liquidations rose 25% in the second quarter compared with a year earlier. And with the government wage bill making up more than 35% of the national budget, the National Treasury said in February it will scale up early retirement for state employees to cut costs. Community and social services, which includes government, is the largest employer in the country.

Bloomberg 2019.