SAIRR Today: The struggle for jobs - 28th May 2010

Much has been written about employment and job creation in the media over the last month. This week SAIRR Today reviews data from the 2008/09 South Africa Survey to give some perspective to that debate.

Between 2001 and 2009 the number of people employed in South Africa across all industries and including the informal sector increased from 12.5 million to 13.4 million.   This was an increase of 7% or of approximately 900 000 net new jobs. South Africa was therefore creating an average of 100 000 net new jobs every year over the period since 2001.

But the agricultural and mining, and to a lesser extent trade, sectors bucked the trends.

In agriculture, the total number of employed people fell from 969 000 to 710 000 or by 27%. The number of mining jobs declined from 488 000 to 319 000 or by 34%. The total number of trade jobs fell from 3.4 million to 3.0 million or by 12%.

On the other hand, the construction, finance, and community and social services sectors all saw significant increases in employment. The number of construction jobs increased from 642 000 to 1.1 million or by 74%. Jobs in the finance sector increased from 1.1 to 1.7 million or by 51%. In the community and social services sectors, the number of jobs increased from 2.1 to 2.7 million or by 27%.

The manufacturing, utilities, transport, and private household sectors also saw increases of between 13% and 0.5% in the number of jobs they provided over the nine-year period.

In 2009 the trade sector was the single biggest employment sector in South Africa. In total, 22% of people who worked in South Africa worked in this sector. The next biggest industrial sector was community and social services at 20% and then manufacturing at 14%. The finance sector accounted for 13% of people who worked in South Africa. This was followed by the private household and construction sectors at 9% and 8% respectively. The transport sector created jobs for just over 5% of employed South Africans.

It will surprise many people to learn that the labour-intensive agricultural and mining sectors jointly employed ‘only’ 7.7% of the country’s workforce.

In 2009, some 24% of South Africans were unemployed. In numbers, this amounted to 4.1 million people. In the black African community the unemployment rate was significantly higher than the national average and among the younger elements of that community almost twice as high. While the country has created an average of some 100 000 net new jobs every year since 2001, research previously published by the Institute has shown that it will have to create between five and seven times as many in order to make significant inroads into unemployment.

It is pertinent therefore to note:

  1. The small proportion of jobs in South Africa that come out of the mining and agricultural sectors.
  2. The relatively high proportion of jobs accounted for in the finance and manufacturing sectors.

Therein lies much of the challenge facing South Africa’s Government as it in turn faces the unemployment problem. The data makes it clear that creating jobs for relatively unskilled people in agriculture and mining is not a strategy that will ever come to terms with the scale of the unemployment problem facing the country. Even in the most unlikely event that the net number of jobs in these two industries were to be doubled, this would still only create opportunities for a quarter of the unemployed – few of whom may want to work on farms or underground.

Rather, it is clear that it is often in tertiary sectors of the economy where the most opportunity lies for job creation. This in turn requires a far more highly skilled population than South Africa possesses. The key to the unemployment problem therefore drifts back into the realm of skills and education and therefore into the realm of Government responsibility. The first step in the formulae for successfully tackling unemployment appears relatively simple – fix the failing schools and create opportunities for poor children to go to university and technical colleges. Then create an enabling environment for investment in tertiary sectors and many of the hurdles that stand in the way of South Africa becoming a more prosperous and stable society will be removed.

-           Frans Cronje