South Africa’s Unemployment Grows

Statistics South Africa reports that the country’s unemployment rate rose to 25.2 percent during the first quarter of the year. That is up from 23.9 percent at the end of 2010 and 21.8 percent in 2008, the last year of the boom. If those no longer actively looking for work are included, Statistics South Africa states that the unemployment rate is 36.6 percent, up from 35.4 percent at the end of last year.

In the short term, construction, manufacturing, and some public sector employment is down, reflecting a shrinkage in exports to the European Union that, in turn, reflects the ongoing economic crisis within the Euro zone.

I have just returned from South Africa where I found unemployment to be a major concern for almost everybody, just as it is in the United States. But it is much worse there than here. According to Statistics South Africa, of those currently unemployed, 60 percent have no matric (roughly the equivalent of a high school diploma), 68 percent have been looking for a year or longer, and 44 percent have never worked.

In South Africa, the labor market is particularly rigid. According to BusinessDay, the World Economic Forum ranks South Africa 139 out of 142 countries: 139 on hiring and firing practices, 138 on lack of flexibility in wage setting, and 138 in labor/employment relations.

Labor inflexibility is a big subject, and many South Africans believe it is the root cause of the country’s high unemployment. After all, the trade unions were at the forefront of the anti-apartheid struggle, and the Congress of South African Trade Unions (COSATU) along with the South African Communist Party (SACP) is politically allied with the governing African National Congress (ANC).

Also a drag on employment is the shortage of trained and skilled workers, itself a reflection of the shortcomings of apartheid-era education that has not yet been addressed successfully by the post-apartheid government. For example, under apartheid, apprenticeship programs were used to steer non-whites into certain occupations. In effect, such programs were associated with apartheid racial restrictions on job opportunities. Accordingly, Mandela’s government did away with apprenticeship programs, but did not replace them with an alternative. The result, so I was told, is a shortage of workers in most of the skilled trades.

Patricia de Lille’s Democratic Alliance government in Cape Town has in fact inaugurated a city-based apprenticeship programs to develop the skilled cadre that the city needs. (The Democratic Alliance is the formal opposition in parliament to the governing African National Congress government led by Jacob Zuma.)

South Africa is now a major immigration destination, not least from Zimbabwe. Many of these new arrivals do have the skills that are in short supply. Accordingly, they find jobs, but that can engender resentment among unemployed South Africans lacking the necessary education or training.

Like so much else in South Africa, high unemployment owes much to apartheid but also to the unintended consequences of post-apartheid policies.