Modeling the Impact of Macroeconomic Factors on Labor Productivity for the Republic of South Africa

Labor productivity measures the efficiency of countries in managing their human resources. The research investigates the impact of macroeconomic factors such as GDP, population growth, employment, unemployment, and wages on labor productivity in South Africa. To determine the causal relationship between the variables in 2000–2021, the authors use several approaches, including the linear scheduling method (LSM), the augmented Dickey–Fuller test, value-at-risk (VAR), Engle–Granger methodology, autoregressive conditional heteroskedasticity (ARCH), and a causality test. Although labor productivity in South Africa is volatile and unstable, the growth of GDP and population in South Africa positively affects the growth of labor productivity, in contrast to employment variables, unemployment, and wages that negatively influence labor productivity in the short and long term. Forecasting results in the study show that the combined effects of GDP, wages, employment, unemployment, and population growth between 2022 and 2027 drive annual productivity growth of 9.689%, given the stability of current economic conditions in South Africa.