unemployment in south africa

INTRODUCTION
Since the political transition in 1994, South Africa has witnessed the acceleration of its already high unemployment rate. South Africa currently has one of the highest unemployment rates internationally. This is the culmination of a long-term, yet steady, rise in unemployment that started as early as the 1970s (Seeking and Natrass 2006), but which has rapidly accelerated in the post-apartheid period. South Africa as a developing country has faced a crisis of the high rate of unemployment in recent years. In the South African labour market, unemployment has remained a crucial social and economic issue. The inheritance of the apartheid socio-politic ant and socio-economic history in the South African labour market has created some structural imbalances that have resulted in alarming and remorseless high rate of unemployment in the labour market .Sixteen years after the apartheid era, social policy programs to address the problems of socio-economic and socio-political have done nothing to alleviate unemployment in the South African labour market. In the period of 2008 and2009 there were also external forces such as world economy recession that influenced the instability in the labour market and also placed South Africa in an unviable position.
South Africa has one of the highest unemployment rates in the world , currently standing at 25,2% based on figures released by Stat SA (2012).Unemployment is a real matter of concern , as it can yield devastating effects on economic welfare ,crime ,erosion of human capital, social exclusion ,misery and social instability ,(Kingdom and Knights , 2007). In 2011, President Jacob Zuma declared the year as the South Africa’s year of job creation in his State of the Nation address in Parliament and announced several initiatives to boost job creation including a R9-billion jobs fund, unemployment still appears to be one of the biggest social challenging areas in the country. ) High unemployment over the last decade has led to heated debates about the extent and causes of the problem and policies to address it. The New Growth Path (NGP) endorsed by the South African cabinet in 2010 aims to create five million jobs by 2020 in order to reduce South African unemployment. The high rate of youth unemployment has also contributed to the massive unemployment rate in South Africa .High rates of youth unemployment represent both widespread personal misfortune for individuals and a lost opportunity for critical national and global economic development. Unemployment in youth has been shown to have lifelong effects on income and employment stability because affected young people start-out with weaker early –career credentials, and show lower confidence and resilience in dealing with labour market opportunities and setbacks over the course of their working lives.(Global Employment Trends for Youth ,2011 update (www.ilo.org). Rising unemployment is a source of considerable concern to both policymakers and labour market participants. So, this essay is going to discuss nature of unemployment in South Africa and the possible solutions to address unemployment and why it is a crucial social and economic issue facing South African labour market.

Labour Force (South Africa)
Many recent studies focusing on the post-apartheid era (Banerjee et al. (2006), Burger and Woodard (2005), Branson and Wittenberg (2007)) have emphasized the role of the rapid increase in labour market participation in driving unemployment upwards, rather than the demand for labour, which remained comparatively stable over the same period. This then removes the focus from a “jobless growth” scenario, but begs the question of which factors initiated an exodus into a perhaps saturated labour market.Included in the labour force is the proportion of the working-age population (between 15 and 65 years of age)that is economically active (employed and unemployed). Excluded are people of working age who are not available for work –among them are pupils, homemakers, those who are retired, and those unwilling to work.[Stats S.A. , Quarterly Labour Force Survey , 2012]. Stats S.A. includes an expanded definition of unemployment in the Quarterly Labour Force Survey, which measures anybody without a job who wanted to work and was available to take up employment in the reference period regardless of whether they actively looked for a job in the four weeks prior to the reference week. In the second quarter of 2012,for example ,about 3.1 million additional people are include in the expanded definition of unemployment who are not counted as officially unemployed. About 900 000 of these are not economically active people along with 2.3 million who are discouraged job seekers, are not included in the official definition of unemployment because they were not actively looking for a job , despite the fact that they were wanting and available to work.[Stats S.A. , Quarterly Labour Force Survey , 2012].

Figure 1: Total number of Unemployed people 2011 and 2012
One need to note the following that out of 4.5 million jobless in March 2012, 71% are youth, 67% are unemployed for more than one year, 47% had not completed secondary school and about 31% are new entrants into the labour force. These statistics provide an alarming signal to the South African Government. In Figure 1 above , the number of unemployed decreased by 96 000 between quarter two and quarter three of 2011 from 4 538 000 to 4 442 000, again decreased by 294 000 between quarter three and quarter four of 2011 form 4 442 000 to 4 244 000 but went up again by 282 000 between quarter four 2011and quarter one 2012 from 4 244 000 to 4 526 000 .This is due to amongst other, lack of education , increased number of economically inactive people , unbalanced fast population growth versus slow employment creation rate , poor communication as well as lack of access to information by poor and disadvantaged groups. It is commonly believed that in the first quarter of the year the majority of the people are still relaxed and not yet ready to search for work.[Stats S.A. , Quarterly Labour Force Survey , 2012]. In the first quarter of 2013 there were 33 240 million people aged between 15 and 64 years in South Africa (up by 112 000 relative to fourth quarter of 2012, and up by 454 000 year on year. Among these people, 18 222 million were economically active (up 114 00 relative to fourth quarter of 2012, and up 274 000 year on year), 13 621 million were employed (up 44 000 relative to fourth quarter of 2012, and up 199 000 year on year .Well below the target of 500 000 new jobs a year), and 4 601 million were unemployed (up by 100 000 relative to quarter four of 2012, and up 75 000 year on year. [Stats S.A., Quarterly Labour Force Survey , 2013].The official unemployment rate in South Africa is now back above 25% at 25.2 %. This compares with 24.9% in quarter four of 2012.The labour force survey suggests that South Africa is still struggling to gain meaningful fraction in the labour market. At 25.2%, the unemployment rate is extremely high by global standards. There are more unemployed South Africans now than there have ever been in the history of the labour force survey. Importantly, 70% of South Africa’s unemployed are younger 35 years, while the unemployment rate among people aged less than 25 years is around 50%.Furthermore, 59, 4% of all unemployed people do not have a matric qualification. [Stats S.A., Quarterly Labour Force Survey, 2013].In the second quarter of 2013, South African unemployment rate increased to 25,6 per cent, the highest rate in two year. Between the first and the second quarters of 2013, the labour force increased by 222 000 persons, reflecting a rise in the number of both unemployed persons (122 000) and employed persons (100 000). The economy is creating jobs but the number of job-seekers is rising at a faster rate
Youth unemployment has a major effect in South African unemployment rate. In the South African economy, low levels of education, the lack of job creation and insufficient social protection means that many youth are also under-employed, engaged in low-income self-employment, informal jobs or unpaid work. Youth unemployment rate in South Africa is currently 48%, according to the latest Global Entrepreneur Monitor. High population growth rate have increased the number of youth entering the labour market .Young people often encounter particular difficulty accessing work because of low experience and fewer skills than many adults. Prolonged unemployment entails higher risk of future unemployment, as prospective employers have negative perception of youth who have been without employment for a long period of time. Discouraged youth gave up looking for work altogether and are in danger of feeling useless and alienated from society. [Global Employment Trends for Youth 2010. August, 2010. Geneva: International Labour Organization.]. The ratio of youth to adult unemployment in South Africa is about 2.5 (i.e. the youth unemployment rate is two and half times larger than the adult unemployment rate).[Stats S.A. , Quarterly Labour Force Survey , 2012].

CAUSES OF HIGH UNEMPLOYMENT RATE
It’s not that the economy is not creating jobs, the problem is that the number of job seekers keeps rising faster than the pace of job creation. The economy is creating jobs but the number of job-seekers is rising at a faster rate. Education is often not adequately tailored to the needs of the labour market, which means that firms are unable to hire the skills they need. Combined with the inability of many economies to create sufficient jobs, it has resulted in increasing the educated unemployed [Gomez-Salvador, R and Leiner-Killinger, N. An Analysis of Youth Unemployment in the Euro Area. Frankfurt: European Central Bank, 2008.] Having the wrong skills makes it hard to get a job. Further, having an overall shortage of skilled labour in an economy can arguably limit the opportunities for employment of less skilled labour. Even those young people who have pursued a course of study with a specific career in mind often find themselves with general or theoretical knowledge that does little to prepare them for the actual tasks they will encounter on the job. This is partly the fault of school curricula and poor connections between employers and the educational system. Young people also lack specific “21st century workplace skills” such as cooperation, communication, critical thinking, creativity, and a focus on the needs of the enterprise. As many youngsters not in school, drop out or do not have some sort of a degree, the crisis of high youth unemployment is growing. An important reason why joblessness is so high among the youth is that young people struggle to gain work experience, which is an important signal of ability to potential employers. This could explain the large number of young South Africans who are unemployed and the significant numbers who spend sustained periods without a job after leaving education.[ National Treasury, February 2011].The education structure used in South Africa is not beneficial to the students as it does not directly correspond to the prevailing economic activities outside the school system. Rather than providing useful skills to students and molding professionals, theory is what is being taught instead of practical. Such education systems just impart literary and general education without sufficient practical content. The end result of this system is an individual whose skills do not replicate the current economic trends in the African job market. Low quality education and high unemployment in South Africa have become more and more problematic in recent years. Due to apartheid era many South Africans were not educated which is making it hard or highly impossible for them to get decent jobs.

Limited education skills affect the labour market outcomes of South Africa in terms of the marketability of the job seekers. The evidence confirms that a large proportion of new youth entrants into the labour force do not reach the highest educational level,which in turn limits their chance to seize job opportunities that become available in the country at a given time.

Table 2 shows that the people who are highly affected by unemployment are mostly those who have not yet completed secondary school in all the quarters. This trend has remained like this for some years despite numerous labour interventions being introduced and implemented in the South African labour market. Although people with tertiary qualifications are less affected by unemployment, there is an increasing trend of unemployment in this group for all the quarters. Comparing Q1: 2011 against Q1: 2012 there is an increase in the number of unemployed of 39 000 from 241 000 in Q1: 2011 to 280 000 in Q1: 2012 amongst those with tertiary qualifications. Unemployment of young people (15-34 years) seems to be more sensitive to changes in aggregate demand than adult unemployment as the first reaction of firms to a recession is to retrench. This strategy affects mostly those in the age category 15-34 years because of the nature of their work which is based on contract of short-term duration. This is an important factor to consider which explains casualization in the country, e.g. African youth category, [Stats S.A., Quarterly Labour Force Survey, 2012]. High youth unemployment means that young people are not acquiring the skills or experience needed to drive the economy forward. This inhibits the country’s economic development and imposes a larger burden on the country to provide social assistance.
Another cause of unemployment is the poor health. Poor physical or mental health can lead, via poor work performance, to job loss; however, studies that control for such selection effects are still scarce except for a few health outcomes. Pretty much everyone agrees that unemployed people are, in the aggregate, less healthy than the rest of the population, both physically and mentally, and especially over prolonged jobless periods. Unemployed people tend to have less money to spend on health care; they are subject to social and psychological stress, which takes its toll on the body and spirit; and, in a country where health-care benefits are usually tied to a job, the jobless are less likely to have access to health care. Some people become too sick to continue working; sick people are likely to miss work more often, and therefore more likely to rise to the top of layoff lists; some people become sick or injured because of their work.
Remedies to High unemployment
To solve the high unemployment crisis we need not to be pussyfooting around. The high unemployment rate has been due to the poor education system here in South Africa. levels of education in rural areas are low the government must first improve the levels of education by building libraries in rural area schools and provide them with more text books so that they will become educated and have more skills this can reduce the number of youth unemployment because the most important cause of youth unemployment is the lack of accurate skills for the job. On the supply side, we must confront the fact that while our government has been incredibly successful at large, one-off projects that involve a limited number of steps (we hosted a very successful World Cup, put a satellite in space, and built a world-class passenger-rail service in our richest province), it has failed when projects require regular, ongoing contact with a large number of end users, such as in education. On the demand side, we must solve the problem of businesses that would rather poach employees from other companies, than employ and train talented people who lack skills and work experience but could add value in the long term. This, in spite of the fact that while the unemployment rate in South Africa is astounding, businesses struggle to fill vacancies. And we also need to address the structural constraints of a large, poorly educated, mostly black population without the social capital to get workplace skills, work experience, and job placement. Yellowwood, a member of Business Leadership South Africa, an association of the country’s largest companies and multinational corporations, has started a project that is beginning to confront those challenges. Called Harambee, it focuses on the factors that prevent young people from finding employment.
On the demand side, Harambee prepares first-time employees for work, providing a pool of skilled workers for businesses and minimizing the risks associated with employing first-time job seekers. It has built a scalable model to source, screen, and match high volumes of young people based on their personal strengths, instead of simply looking at their educational history or other formal qualifications, and it can do this for multiple organizations at the same time. Harambee also assists job seekers in identifying which of their skills may need improvement and offers them help. On the supply side, Harambee sources and selects young people who exhibit demonstrated potential but who have gaps in work readiness, and puts them through an intensive bridging program that helps them cultivate the skills and personal development needed for success in the workplace. They are then placed in preselected, permanent, formal-sector jobs. Harambee also addresses the resource constraints and lack of social networks that young people face when looking for work. It deploys recruiters to the areas of greatest deprivation, for example, and creates application processes that use accessible technology, such as cell phones, to reduce the costs of applying for a job. Harambee provides a model for a long-term solution to youth unemployment, by showing the importance of business and government working together to address the problem. Only the government has the scale to reach the young and unemployed, and only the government can make the long-term commitment needed to educate our young stars. On the other hand, the business community knows which skills it needs and what it takes to make someone employable. Business must work with government to adapt the school curriculum, in particular the curricula of Further Education and Training (FET) courses, so that young people leave school ready for work. In South Africa, we have already seen the success of one such effort, in which the five biggest construction companies helped rewrite the syllabi of FET colleges to meet their industry’s needs. The result: an increase in the percentage of graduates who found jobs.
We also need to build in incentives for businesses to address the social-capital deficit in poor communities. We need to make it easier and cheaper to apply for work by providing incentives for businesses to reach out to applicants.

Conclusion
Only when business and government work together to leverage their comparative advantages can we begin to address the problem of youth unemployment. Business needs to get its head in the game. As businesspeople, we must remember that youth unemployment is not just a problem for government; it is a problem for everyone. It is also not a problem that one group can solve alone. The solutions are not simple, but we have a common interest, and together we can make a start.