SA needs a job-creation drive in labour-absorbing sectors

Please find attached a soundbite by Dr Michael Cardo MP.

The fact that the expanded unemployment rate now stands at an all-time high of 43.2%, according to the Quarterly Labour Force Survey (QLFS) for the 1st Quarter of 2021, underscores the need for a concerted job-creation drive in labour-absorbing sectors.

The key takeaway from the QLFS released today is that between the 4th quarter of 2020 and the 1st quarter of 2021, the number of discouraged work-seekers increased by 201 000. This takes the number of unemployed people, including those who have given up looking for a job, to 11.4 million. The expanded unemployment rate for those aged between 25 and 34 stands at an alarming 51.4%.

South Africa needs urgent legislative changes to make the labour market more flexible and absorptive. The government is preoccupied with public employment projects and a localisation drive that is somehow expected to make a dent in unemployment. This is the wrong focus. It will only ever provide a drop of jobs in the ocean of joblessness.

We need to support value-adding, export-led growth sectors to recover from the pandemic and lockdown, and to ramp up jobs at scale. We must free them from over-regulation by the state so that they can grow and expand their workforces.

A study published by the African Growth Initiative at the Brookings Institution earlier this year found that the so-called “industries without smokestacks” – especially tourism, horticulture, agro-processing and logistics – could produce both the number and type of jobs required in South Africa. These sectors are tradable; they have relatively high value-added per worker, and they show a capacity for technological change and productivity growth. Above all, they have the potential to absorb low- and semi-skilled workers.

Only the private sector can create jobs at scale and rapidly absorb predominantly low-skilled workers into the economy. This means we need to unleash the private sector through legislative and policy reforms to the labour market.

Until that message sinks in, our unemployment numbers will continue to rise.

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