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Growth, Employment And Unemployment In South Africa

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  • Duncan Hodge

Abstract

The high rate of unemployment in South Africa stands out in an otherwise vastly improved set of macroeconomic fundamentals compared with the situation in the early 1990s. One might be tempted to argue that by this single indicator alone, the government's macroeconomic policies have been a failure. This paper explains why jumping to such a conclusion would be a mistake. Annual time series data on total formal sector employment is constructed dating back to 1946. The relationship between economic growth and formal sector employment is then measured and changes in the employment coefficient over time are described. The employment coefficient was found to be relatively stable, with a long‐term average value of 0.5. It returned to this value after a short‐lived collapse in the mid‐1990s. It is concluded that the main reason for the persistently high and rising rates of unemployment in South Africa since the mid 1990s was the very large increase in the labour force and not a historically deficient growth or employment performance of the economy.

Suggested Citation

  • Duncan Hodge, 2009. "Growth, Employment And Unemployment In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 77(4), pages 488-504, December.
    • Handle: RePEc:bla:sajeco:v:77:y:2009:i:4:p:488-504
    DOI: 10.1111/j.1813-6982.2009.01226.x
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    References listed on IDEAS

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    1. Geeta Kingdon & John Knight, 2007. "Unemployment in South Africa, 1995--2003: Causes, Problems and Policies," Journal of African Economies, Centre for the Study of African Economies, vol. 16(5), pages 813-848, November.
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    3. Weeks, John, 1999. "Stuck in Low GEAR? Macroeconomic Policy in South Africa, 1996-98," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 23(6), pages 795-811, November.
    4. D. Hodge, 2006. "Inflation and growth in South Africa," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 30(2), pages 163-180, March.
    5. S Roberts, 2000. "Understanding the Effects of Trade Policy Reform: The Case of South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 68(4), pages 270-281, December.
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    Cited by:

    1. Kenny S, Victoria, 2019. "Determinants of Manufacturing Sector Performance and Its Contribution To Gross Domestic Product In Nigeria," MPRA Paper 93293, University Library of Munich, Germany.
    2. Mohimont, Jolan, 2022. "Welfare effects of business cycles and monetary policies in a small open emerging economy," Journal of Economic Dynamics and Control, Elsevier, vol. 136(C).
    3. Nicola Viegi, 2015. "Labour Market and Monetary Policy in South Africa," Working Papers 6607, South African Reserve Bank.
    4. Yaya O. S. & Akintande O. J. & Ogbonna A. E. & Adegoke H. M., 2019. "Cpi Inflation In Africa: Fractional Persistence, Mean Reversion And Nonlinearity," Statistics in Transition New Series, Polish Statistical Association, vol. 20(3), pages 119-132, September.
    5. Frederick C.v.N. Fourie, 2011. "The South African unemployment debate: three worlds, three discourses?," SALDRU Working Papers 63, Southern Africa Labour and Development Research Unit, University of Cape Town.
    6. Altug, Sumru & Tan, Barış & Gencer, Gözde, 2012. "Cyclical dynamics of industrial production and employment: Markov chain-based estimates and tests," Journal of Economic Dynamics and Control, Elsevier, vol. 36(10), pages 1534-1550.
    7. Kenny S, Victoria, 2019. "A causal relationship between unemployment and economic growth," MPRA Paper 93133, University Library of Munich, Germany.
    8. Kenny S, Victoria, 2019. "Employee productivity and organizational performance: A theoretical perspective," MPRA Paper 93294, University Library of Munich, Germany.
    9. Kwenda, Prudence & Benhura, Miracle & Mudiriza, Gibson, 2020. "Former Homeland Areas and Unemployment in South Africa: A Decomposition Approach," IZA Discussion Papers 12941, Institute of Labor Economics (IZA).
    10. repec:exl:29stat:v:20:y:2019:i:3:p:119- is not listed on IDEAS
    11. Erten, Bilge & Leight, Jessica & Tregenna, Fiona, 2019. "Trade liberalization and local labor market adjustment in South Africa," Journal of International Economics, Elsevier, vol. 118(C), pages 448-467.
    12. Johannes Fedderke, 2012. "The Cost of Rigidity: The Case of the South African Labor Market," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(4), pages 809-842, December.
    13. Meyer Daniel Francois & Sanusi Kaseem Abimbola, 2019. "A Causality Analysis of the Relationships Between Gross Fixed Capital Formation, Economic Growth and Employment in South Africa," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 64(1), pages 33-44, April.

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