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Growth, Employment And Unemployment In South Africa


  • Duncan Hodge


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. Copyright (c) 2009 The Author. Journal compilation (c) 2009 Economic Society of South Africa.

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

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    References listed on IDEAS

    1. Weeks, John, 1999. "Stuck in Low GEAR? Macroeconomic Policy in South Africa, 1996-98," Cambridge Journal of Economics, Oxford University Press, vol. 23(6), pages 795-811, November.
    2. D. Hodge, 2006. "Inflation and growth in South Africa," Cambridge Journal of Economics, Oxford University Press, vol. 30(2), pages 163-180, March.
    3. 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.
    4. Rulof Burger & Ingrid Woolard, 2005. "The State of the Labour Market in South Africa after the First Decade of Democracy," SALDRU/CSSR Working Papers 133, Southern Africa Labour and Development Research Unit, University of Cape Town.
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    Cited by:

    1. 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.
    2. 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.
    3. Vincent Dadam & Nicola Viegi, 2015. "Labour Market and Monetary Policy in South Africa," Working Papers 201569, University of Pretoria, Department of Economics.
    4. 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.

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