Explainer: Where do jobs come from?

South Africans are used to politicians making promises about jobs.  

 But time after time, these jobs simply fail to materialise and the promises fade away.  

 But why is this the case?  

 Well, the simple reason is that too many people in power do not know how jobs are created.  

 So: where do jobs come from?  

Watch here:

Transcript

South Africans are used to politicians making promises about jobs.  

But time after time, these jobs simply fail to materialise and the promises fade away.  

But why is this the case?  

Well, the simple reason is that too many people in power do not know how jobs are created.  

So: where do jobs come from?  

A job is created when three parts come together:  

1. The first part is a buyer: that is a person or a company that wants to get something done that they can’t do themselves, or which they would rather pay somebody else to do. 
2. The second is a seller: a person who is able and willing to do the thing that the buyer wants.  
3. The third is a reward: something the buyer can give the seller in exchange for the desired good or service, such as a payment.  

 Now let’s look at South Africa. Why is there an unemployment crisis?

The reason is twofold.    

Firstly, although there are many unemployed people willing to work and wanting to work, not all of them have the ability to do the sorts of things that buyers of labour are looking for. There is a skills mismatch between what the job market requires and what it can supply.  

Addressing this means fixing our education system.  

Secondly, there are many factors discouraging potential employers from hiring workers. Think of onerous labour regulations, threats to property rights, uncertain growth prospects – the list goes on. These factors depress economic activity and discourage potential employers from hiring new staff.   

Addressing this means creating a favourable investment climate and eliminating the many obstacles holding businesses back.  

So, next time a politician promises to create jobs, challenge them immediately on what their plan is. Will it work to create jobs and make South Africa more productive and more successful? 

Illustration sources available here.