“Unemployment remains a crucial social and economic issue facing the South African labour market. Critically discuss the nature of unemployment in South Africa and possible solutions to address unemployment.”
The expanded definition of unemployment, which includes people who have stopped looking for work, fell slightly to 34.2% from 34.4%. After three consecutive quarters of massive job losses, 4th quarter of 2009 showed a possible end to the deterioration in the labour market rather recovery (WEB: Stats S.A.). Jobs created, were mostly in the informal sector and unskilled worked. The total number of unemployed people stood at 4.165 million in the three months to December, while the number of the employed people increased by 89,000 to 12,974 million (WEB: Stats S.A).
“All those people who are working, whether for themselves or for someone else, as well as those want to work and are looking for work, i.e. the unemployed people” (2007:9).
Certain factors influence these decisions that are mentioned above, for instance the personal preferences of the individual, the amount of money he or she needs, the wage rate. If all the decisions of individuals are added up, it gives the market supply of labour (Barker, 2007:8). It does not matter whether the persons are working or simply want to work; they are all part of the supply of labour (Barker, 2007:8). Furthermore, the type of work they do is also irrelevant, for instance whether they work in the informal sector or are an employer of other people. All these people form part of the labour force, or the supply of labour (Barker, 2007:8). The labour force and the supply of labour are then defined as being the population of age that is working or that wants to work (the unemployed) (Ruggunan, 2010 ed. Barker, 2007: 8). It is influenced by factors such as the proportion of the population that wants to work, the size of the population (as determined by, among other things, fertility and mortality rates) and net immigration. Also the changes in the economic environment, especially the wage rates and incomes, fall under the supply of labour (Barker, 2007:8).
“By providing high-performing women with a variety of experiences, including training, mentoring and ‘stretch’ roles, to increase confidence to prepare them to succeed in senior leadership, leading organisations are ensuring a sustainable and motivated workforce for the future.’’ (Mail & Guardian online: 10 March 2010)
The reasons for such increment, is the rise in women’s wages as a result of reduced discrimination, the expansion of the services sector, also the increasing levels of education among women, the gradual decline in birth rates enable women to participate in the economy for longer periods (Ruggunan, 2010). Triple impacts of the age, skills, HIV/Aids and gender effect are likely to impact negatively on the composition of the labour force, as well as the range of skills, knowledge and experience available in the labour market (WEB). The labour supply is not only a matter of quantity but also quality (Barker, 2007:9).
The Sample Survey Method, this involves a survey that is undertaken among a number of households to determine the economic status of the members of the household, example being the Labour Force Survey- LFS (Barker, 2007:178). The Census Method is the second approach to measure unemployment that is based on the economic status of the whole population is determined by asking individuals what their economic status is (Barker, 2007:178). Then lastly comes the Registration Method, this includes the statistics on registered unemployment which was obtained from returns submitted on monthly basis by the different placement centres of the Department of Labour (Barker, 2007:184).
There several types of unemployment, but i’ll be discussing the main one in South Africa which is the “structural unemployment”. This is due to the structural imbalances in the economy, or the way, in which the economy is organising, the country is unable to provide sufficient employment even when the economy is at its peak performance (Ruggunan, 2010). This type of unemployment is not sensitive to changes in aggregate demand. Hence, structural unemployment is the unemployment that exists when the economy is at full employment (Mafiri, 2002:10). Jobless growth appears to the norm in the increasing of unemployment in South Africa (Mafiri, 2002:18). This shows that the major part of the South African unemployment does not react that much to the cyclical changes in the level of economic activity (Mafiri, 2002:18).
The main causes of unemployment can include the rapid changes in technology, the recessions, inflation, disability, undulating business cycles, it can also be in terms of the attitude towards the employers (WEB: Economy Watch). The changes in tastes as well as alterations in the climatic conditions, this may in turn lead to a decline in demand for services as well as products (WEB). Also the willingness to work, perception of employees, employee values, even discriminating factors in the place of work (may include discrimination on the basis of age, class, ethnicity, colour and race), the ability to look for employment (WEB: Economy Watch).
The following are the recommended government policies for alleviating unemployment problem in South Africa:
One of the South Africa’ high unemployment is the relatively slow growth of the economy (National Economic Development and Labour Council, 2000: 44). In 1996 the government announced its Growth Employment and Redistribution policy which recognises higher economic growth and significant jobs creation as the key challenges of economic policy the fiscal deficits, while strengthening the redistributive effect of expenditure; a reduction on tariffs to contain input prices; the gradual relaxation of exchange controls; anti-inflationary monetary policy; tax incentives to stimulate new investment; Small and Medium-sized Enterprises development; restructuring of state assets (which among others include privatisation); expansionary infrastructural investment; a structured labour market flexibility within the collective bargaining system; an enhanced human resource development; and a social agreement to facilitate wage and price moderation (Barker, 2007:186). The government’s employment strategy specifically proposes measures to promote investment and exports, and others (RSA 1998: par. 3.5.11 ed Barker, 2007: 186).
In 2005, the President announced that the ultimate objective of the Accelerated and Shared Growth Initiative of South Africa is to halve unemployment and poverty by 2014 (Barker, 2007: 187). It is not intended to cover all elements of a comprehensive development plan; rather it consists of a limited set of interventions to complement GEAR (RSA 2006- Barker, 2007: 187). This particular strategy, highlights the following binding constraints: the volatility and level of the currency; the cost, efficiency and capacity of national logistics systems; the shortage of suitably skilled labour amplified by the cost effects on labour of apartheid spatial patterns; barriers to entry, limits to competition and limited new investment opportunities; the regulatory environment and the burden on small and medium businesses; and the deficiencies in state organisation, capacity and leadership (Barker, 2007: 187). The response to the constraints is a combination of systematic initiatives, optimising on public expenditure, improving the environment to do business in South Africa and also removing bottle-necks (Barker, 2007: 187).
This is a new structure that is led by a committee of relevant Ministers, business leaders, trade unionists and education and training providers or experts (Barker, 2007: 188). Its main job is to confirm the urgently needed skills find quick and effective solutions (Barker, 2007: 188). Its interventions focus more in the second economy, which intends to create sustainable bridges between first and second economies to enable growth and graduation to a sustainable economy (Barker, 2007: 188). This will done by focusing on growth cooperatives; unlocking the value of assets in poor people’s hands; small business; public works programmes, especially training; women in training; and also the youth (unemployed graduates), even the public administration issues and the macro-economic issues are dealt with in this form of policy (Barker, 2007: 188).
South Africa does not have a system of social security and therefore urgently requires a programme to assist unemployed persons who do not receive unemployment insurance (Barker, 2007: 194). According to the Reconstruction and Development Programme, the key in which special measures to create jobs can lead to building the economy and meeting basic needs is in redressing infrastructure disparities (Mafiri, 2002: 66 ed Barker, 2007: 195). The government’s strategy refers to the following: clean cities campaign (the delivery of waste services to poorly serviced areas); working for water (clearing invasive alien vegetation); land care campaign (rehabilitation and conservation of natural resources); municipal infrastructure programme (for low income areas); welfare programmes (which offer training, education and other opportunities for destitute); and community-based public works programmes (primarily in rural areas) (Barker, 2007: 195 & 196).