SA has lowest employment ratio in Africa – report

1st July 2010 By: Loni Prinsloo

Africa's largest economy, South Africa, is boasting the highest unemployment ratio on the continent, with almost 60% of people being unemployed and 25% choosing not to participate in the country's economy.

Economist Mike Schussler, who presented the '2010 Uasa South African employment report' in Johannesburg on Thursday, said that, in fact, more people in the country were currently receiving money from welfare than from employment, with 12,8-million people working and 13,8-million people receiving welfare payments from the proceeds of only five-million people.

Schussler pointed out that 40,8% of adults in South Africa were employed, compared with 83% in Uganda, 80% in Rwanda and 78% in Tanzania and Malawi.

"If South Africa was just able to up its employment numbers to the average ratio in Africa of 64%, adult employment in the country would have grown with seven-million jobs," he added.

In fact, Schussler said that the only countries that were doing worse than South Africa in employment numbers were countries ridden by war such as Gaza, Iraq, and Afghanistan.

The report showed that employment growth in South Africa's formal nonagricultural sector added a mere 2% to the employment numbers over the past decade. "We at least need a 2% growth in employment numbers every year. This is screamingly bad and shows that the country has been pussyfooting around in its aim to create additional employment," Schussler commented.

The report showed that fewer people were currently working in South Africa than before 1994. "With around a million jobs lost over the recession, South Africa is still at a net job loss after 16 years of democracy. Government is currently only protecting older jobs and not creating new jobs, creating more inequality in process."

Schussler said that people in the country had become so desperate for work that they had been working free for months in the hopes of getting paid at the much-shamed Aurora mines. "This desperation is a crying shame, showcasing South Africa's failure in creating decent jobs even in an African context."

Meanwhile, he noted that the answer did not lie with employing more people in central government and other State-owned entities, seeing that it already employed around 24%.

Sectors in the economy that has shown some measure of growth over the past four years included government, electricity, water and gas, mining and transport, while construction and manufacturing showed a large loss in jobs over the same period.

Schussler said that government should stop supporting sectors and deploying policies for sectors that were not making it and start structuring policies for sectors that were showing potential for employment growth such as the services sector.

In the medium term, Schussler said that continued growth in fixed-capital formation might be helpful, with economic infrastructure, such as building roads and dams, being the best option.

However, he noted that in the longer term, education would be an essential tool to build South Africa's economy and to create decent jobs. "There are no decent jobs, without decent education," stressed Schussler.

He added that more attention should be given to pulling people through the system from lower and secondary education through to tertiary education, which was where the country was lacking.

Lastly, Schussler pointed out that South Africa could create large numbers of jobs by cutting through the red tape and dropping some of its unnecessary laws and policies.

"Let's open up our skies and make way for more freight and people to enter our country, or let's get more people opening up radio stations and generating more advertising, these are simple ideas that will not cost a lot of money, but will generate many more jobs in the country.

"Fewer laws would mean more hiring, while concrete plans to remove red tape would make it easier for entrepreneurs to do business and create jobs," Schussler concluded.