September 17, 2018

South Africa is suffering an unemployment crisis

South Africa is suffering an unemployment crisis

South Africa is suffering the world’s biggest unemployment crisis‚ according to the 17th South African Employment Report.

The country’s unemployment rate is 27.2%, almost five times the international average of 5.5% and significantly higher than its emerging market peers Brazil (12.3%), India (3.5%), China (3.9%), Russia (4.7%), and Mexico (3.5%).

Over six million people were actively looking for work in 2017, meaning the country had the highest unemployment rate in the world last year. 

Delivering the report‚ economist Mike Schussler said the number of unemployed had increased from six to 9.6 million between 2001 and 2018, a 60% increase in the broader rate of unemployment. The increase had had a devastating effect on inequality and poverty in the country. “Along with other factors‚ such as single female-headed households‚ this low number of employed results in much of South Africa’s poverty and inequality,” he said.

Martin Biewen has investigated poverty persistence and poverty dynamics for IZA World of Labor. He writes that “…unemployment, retirement, and single parenthood are closely associated with persistent poverty and that higher education tends to protect against it.” Biewen believes that “[p]olicies that promote education, employment, and attachment to work will be most effective in reducing persistent poverty, along with policies that strengthen family and job stability.”

In looking at policies to support women’s paid work, IZA World of Labor’s Gianna Claudia Giannelli stresses that “[e]ngaging in paid work is generally difficult for women in developing countries.” Policies to enhance women’s access to paid work and support their efforts to start a business should also consider any potential negative spillover effects on child well-being, since women still bear most of the burden of childcare, she says. Integrating public provision of childcare with training programs can make it easier for women to engage in paid employment. 

Schussler believes that accelerated economic growth is the only sustainable way to tackle the unemployment crisis. For rapid economic growth to happen‚ he feels that South Africa needs to create macroeconomic stability and certainty.

Read more IZA World of Labor articles on youth unemployment and fighting long-term unemployment