Few of those looking for work can find one in an economy with an unemployment rate of 27.2%. In reality, the picture is much bleaker because the official unemployment rate tends to underestimate the weakness of job prospects. How come? This is due to the missing employees – potential employees who are not employed or looking for a job due to the long-term scarcity of job opportunities. There is no argument that we have the lowest employment rate since the rise of democracy, and we consider the informal economy to be useful because we know that those who are not part of the labor force can not live on it.
In South Africa we have 15.5 million people who are not economically active, but there is an even more worrying group of people within that number. The clear and current danger – the ticking time bomb – of youth, who have been ignored for the greater part of their lives by the private sector and the government.
According to the Statistics SA Quarterly Labor Force Survey for the second quarter of 2018, South Africa has 10.3 million people between the ages of 15 and 24 who do not have work, no training or training. A rising tide of young people who literally do nothing with their lives, not because they do not want it, but because of the way our economy is set up. It is as if the economy, policies and leaders of the country are conspiring against these young people. Oh, wait – some claim they are.
It is worrying that these young people make up the most unemployed 27.2%. If there was ever a reason for panic or worry, this is it. Yet these figures do not even come close to the lived reality of those who are unemployed and have long abandoned the job search.
The point I am making here is that in a complex economy conventional measures do not always show the complete image. If we start using the extended unemployment of Stats SA, which amounts to 37.2%, we may start to appreciate the scale of the crisis.
It has asked me to ask how long the South African economy can survive this crisis of crisis, rising unemployment and poverty.
Can the government and the private sector afford to think that it can go on without consequences?
I do not think so. It is in their own interest that the economy starts to improve and eventually grows. We know that positive GDP will not automatically reduce unemployment and poverty. For South Africa, besides growth in productivity and fair income distribution, it will also need economic growth.
Low labor market participation, high youth unemployment and an informal employment sector that hardly improves the life of the participants – these are not just wrinkles in the economy; they are slits that appear to be widening and can not easily be patched. In the 10 years since the global financial crisis of 2008 – with its impact on our economy and businesses – hundreds of thousands of South Africans have left the labor force. And we can not ignore the effects of globalization and its effects on the labor market in emerging markets.
It is worth repeating, even though I have done so in many columns, that the creation of jobs must be of fundamental importance for the private sector, and more importantly than the state, because the former has a supporting role. can play in creating an attractive environment. Now that the administration of former President Jacob Zuma is no longer the stumbling block to claim to be, what does the private sector stop? After all, the & # 39; new dawn & # 39; investment desire of President Cyril Ramaphosa has yielded more than $ 10 billion so far.
On the one hand, local businesses would do well to put their money into this investment drive, otherwise we start thinking the problem has always been the reluctance of the private sector to join the government in the hard work . The perception is that the private sector deliberately withholds the cash reserves that the government wants to use to give the economy a new impulse by rebuilding the foundations by local investments.
On the other hand, the government must make an effort to gain insight into the broader forces and activities that have brought about a shift in the labor landscape – including the shift from formal to insecure work, and the growing number of former employees that & # 39; missing workers & # 39; (and those who have no job have given up looking for work, and are not economically active).
Juan Somavía, former director general of the International Labor Organization, once said:
" We know only too well that it is the world of work that is the key to a solid, progressive and long-term eradication of poverty Disabling poverty is impossible unless the economy generates opportunities for investment, job creation and sustainable livelihood . "
Economic growth is not a panacea, but it is a beginning. Here is a bitter pill to swallow – just in case the private sector has to do the hard work, turning the ground through local investments. They must be it and not an outsider who makes the first move and does the heavy work.
How long can the extraordinary levels of poverty, unemployment and income inequality and inequality in wealth continue? Can the South African economy flourish alongside these conditions? No, it is not possible.
It is time to repair them, not for altruistic reasons, but to prevent the social instability that causes such conditions.
More local investments are the key. It could lead to more money in the hands of ordinary South Africans, if there is a fair distribution. And perhaps, perhaps perhaps, this can stimulate economic growth, expand the tax base and ultimately lead to jobs that will reduce unemployment and poverty.