On May 29 I became one of about 21.9-million eligible voters — 58% of South Africans aged 18 and above — who decided to boycott the general election.
The hardest part was explaining to my son why I had fought for this freedom but decided not to vote. I told him I had made up my mind that any political party that did not provide a credible path towards achieving full employment — an unemployment rate of less than 5%, according to my definition — would not get my vote. This is a reasonable target because the world unemployment rate is 5.1%, and more than 80 countries have achieved full employment.
But after three decades of ANC misrule, South Africa had the world’s second highest unemployment rate in 2023 after Eswatini, according to the International Labour Organisation. We had a higher unemployment rate than the West Bank and Gaza before the genocide.
During the second quarter of 2024, according to Stats SA, there were 12.4-million people who did not work and the unemployment rate for people of all races was 42.6%. There were unemployment rates of 70.6% for youth, 47% for Africans, 50.4% for African women and 54.2% for people in the North West. There were 1.1-million unemployed people with tertiary qualifications. This shows that the skills mismatch theory of unemployment is a fantasy.
If the problem was on the supply side, there would have been millions of unfilled vacancies. Therefore, it is an insult to say that people are unemployable and blame the victims for their own suffering.
In May 2024, according to a Stats SA survey, large industrial companies had immense spare capacity of 22.4%, primarily because of “insufficient demand”, they said. As US economist Stephanie Kelton says: “Capitalism runs on sales. In survey after survey, we find that the number one reason businesses are slow to hire and invest in new plant and equipment is a lack of demand for the things they produce. Businesses hire and invest when they’re swamped with customers.”
Though unemployment was the number one priority for 75% of voters, according to a Change Starts Now survey, the main political parties did not provide any solutions. The ANC’s manifesto made me want to weep, and the party did not even bother to have a jobs target. The DA had a lame target of 2-million jobs in five years — a drop in the ocean that does not even create enough jobs for the annual new entrants into the labour market, let alone the 12.4-million unemployed people.
The EFF said a new state construction company and insourcing would create 4-million and 2-million jobs, respectively. But the formal construction sector employs only 744,000 people, and the public sector sustains almost half of industry spending. A state construction company will mostly shift existing jobs from the private to the public sector. The same applies to insourcing, and the target is implausible because the public sector employs about 2.2-million people.
South Africa must achieve an annual GDP growth rate of 4% just to create enough jobs for the 740,000 annual new entrants into the labour force. Either we want to solve the crisis or we don’t
The MK Party’s manifesto had progressive policies such as a basic income grant and a job guarantee. But Jacob Zuma also implemented failed neoliberal economic policies during his presidency. As the austerity policies began to bite, there were four years of declining GDP per capita from 2014 to 2017. The number of unemployed people increased by 3.3-million during his presidency.
South Africans must understand the real drivers of the unemployment crisis. The core issue is that the economy has not created enough jobs to absorb the annual new entrants into the labour force and reduce the number of previously unemployed people. From the fourth quarter of 2008 to the second quarter of 2024, the labour force grew by 8.3-million people. But the economy created only 1.9-million jobs. Therefore the number of unemployed people increased by 6.4-million.
On the supply side, using a labour force growth rate of 2.3% – slightly lower than the pre-pandemic five-year annual average – 740,000 people will enter the labour force each year until 2035. On the demand side, the GDP growth rate times the employment multiplier is equal to the employment growth rate. The employment multiplier is an observed historical relationship between GDP growth and jobs. South Africa has never had “jobless growth” since 1994; it has an employment multiplier of about 0.9, according to my estimate.
When GDP increases by 1%, employment increases by about 0.9%. Under the status quo, an annual GDP growth rate of 1.5%, the economy will create about 240,000 jobs each year until 2035. And the number of unemployed people will increase by about 500,000 a year.
Unemployment is a macroeconomic policy issue that we cannot address through projects. There are three levers to confront the crisis. These are GDP growth, industrial policies that increase the employment multiplier or labour intensity of growth, and public employment programmes. The problem is that nobody, including the Treasury and the Reserve Bank — the two most important institutions in the economy — is responsible for growing the economy and creating jobs.
South Africa’s industrial policies are a joke, with spending of only 0.3% of GDP, and the Treasury has slashed the budget for industrial incentives by 39% over the past three years. The Treasury has also decimated the budgets of public employment programmes by almost R10bn. South Africa must achieve an annual GDP growth rate of 4% just to create enough jobs for the 740,000 annual new entrants into the labour force. Either we want to solve the crisis or we don’t.
With 6% GDP growth, there’ll still be 5.9-million unemployed people by 2035 and an unemployment rate of 15.7%. But with 6% GDP growth and aggressive industrial policies that increase the employment multiplier to 1.1, we will create 1.6-million jobs a year and achieve full employment by 2035.
We must merge our three public employment programmes and create a new quasi-public institution that has the capacity to create millions of jobs and provide a job guarantee. South Africans must understand the scale of the crisis. We cannot aim a water pistol at a blazing inferno of 12.4-million unemployed people that is growing by 740,000 every year. By definition, the policy tools to confront the crisis must be very large and have an impact throughout the economy.
Creating 19-million jobs by 2035 will be the equivalent of a war effort. South Africa needs a non-negotiable GDP growth target of at least 6% that is binding on Treasury and the Reserve Bank.
We must have a developmental central bank that has a mandate to target GDP growth, jobs and inflation and uses a wider range of policy tools than interest rates alone to achieve its targets. Each year, the Treasury and the Reserve Bank must calibrate the macroeconomic policy tools to achieve the target, spending into the economy the difference between the expected growth rate and the target.
Without a growth target that mobilises society, there’s no future for South Africa, especially the youth.
• Duma is a research associate at the Social Policy Initiative. He writes in his own capacity
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