South Africa has the lowest recorded employment rate in the world, with only 41% of South Africans between the ages of 16 and 64 having any kind of job, a newly released Centre for Development and Enterprise (CDE) report states.

“South Africa’s labour market rules make it expensive to employ people, so fewer people are employed. Those who do get jobs tend to have the necessary skills and experience,” explained CDE executive director Ann Bernstein.

She said that restrictive labour laws made it too expensive to employ large numbers of unskilled workers, leading to South Africa sinking deeper into crippling unemployment.

The report, titled ‘A Fresh Look At Unemployment: A conversation among experts’, discusses the causes of South Africa’s unemployment crisis and what needs to be done about it.

“Unemployment is directly or indirectly at the root of most of South Africa’s serious social, economic and political challenges,” noted Bernstein.

A South African employment rate of 60% – roughly the global norm – will require 19-million jobs, nearly 50% more than the 13-million jobs that exist today. Besides this, population growth means that the number of jobs needed increases every year.

“South Africa does not have so-called jobless growth. What we have is a declining relationship between growth and employment – primarily as a result of bad policy choices.

“The country has a double challenge: we have to make the economy grow more quickly and we have to change the policy environment to ensure a more labour intensive growth strategy,” said Bernstein.

The report notes that South Africa’s labour costs, which include wages as well as other regulatory and administrative costs, are higher than those of many other developing countries, and they continue to rise.

South African companies also have to manage difficult industrial relations, with more workdays lost to strikes in 2009 than almost any other country in the world.

“You can only have high labour costs if your workers are very productive. This makes it risky to hire unskilled, poorly educated and inexperienced people, which describes most young South Africans, especially if it’s costly to dismiss them,” said Bernstein.

She suggested that employers learn the lessons from Newcastle’s clothing industry. “In that town, with an unemployment rate of 60%, workers have shown that they are willing to accept wages below the minimum levels prescribed by the bargaining council. They have attracted more clothing factories as a result,” she said.

South Africa needs to encourage the development of low-wage industries, such as in Newcastle. This strategy has enabled other countries to employ large numbers of people, as well as driving high and sustained rates of economic growth.

“Events in Newcastle should be seen as a model for a new industrial structure. If we’re going to employ millions of unskilled people, it’s not going to be in factories making high value goods. Although these employees might not like low-wage factories, people who live in areas with 50% to 70% unemployment rates desperately want these jobs,” concluded Bernstein.