South Africa’s unemployment problem has been persistent since 1994 and long before the migration of Africans from elsewhere making their way south.
Foreigners do not occupy all the formal jobs that the South African economy creates because there would have to be good reasons for employing foreigners in the formal sector due to our labour laws, immigration policies and employment equity rules. Those employed in the formal sector constitute about 4% of the formal workforce.
Where there is competition for resources and jobs, is in the informal sector, where both South Africans and international migrants who are unskilled and semi-skilled are subject to precarious occupations and often pitted against each other.
South Africa’s economy is vulnerable to the pace at which government can turn its spend into growth, the extent to which large domestic multinational firms that secure profits in South Africa reinvest in the South African economy and most importantly, the regularity with which foreigners buy our goods – like minerals and manufactured goods – and also spend their money in our economy.
All of this adds up to growth and jobs. But it all depends on where the growth comes from and how the jobs are created and sustained. If the bulk of foreign spending goes into the stock market and not into the mines or directed towards manufacturing, fewer jobs will be created.
Since 1994 and well before that, shifts were already visible in the South African economy. There was a structural shift. The economy became more service orientated, whilst agriculture, mining and manufacturing shed jobs.
Services tend to employ a more skilled workforce with the financial and business services attracting the most skilled and educated human capital. More importantly, given that the South African economy is more open, private firms and government enterprises have the option of regionalising and globalising their purchasing and growth opportunities.
Creating employment cannot be the task of government alone. South Africa’s stability and future also depends on the private sector making a contribution. […]