Fast growth may not create jobs

South Africa’s economy must grow by between five and eight percent to start meaningful job growth Reuters quoted economists as saying on Wednesday. “I really don’t know how fast the economy must grow to bring the jobless level down. It may even be closer to eight percent,” said PSG Investment Bank economist Noelani King. Others said rapid growth alone may not put people to work in an age of globalisation and corporate restructuring.

Economists admit that it is hard to estimate how fast the economy - which grew by an estimated 3.1 percent last year - must expand to create work in a country where more than a third of the labour force lacks formal employment. Andrew Whiteford of the economic consultancy WEFA Southern Africa said the five to six percent figure usually quoted as leading to job growth is no longer relevant as it is often based on outmoded assumptions about an economy that has undergone a dramatic structural change in recent years. “Now we have positive GDP growth associated with negative employment growth,” he said.

The economy has grown, albeit sluggishly for the most part, since the end of apartheid in 1994.

Yet it has shed well over 500,000 jobs since that time. In 1997 alone, 142,000 jobs are estimated to have been lost when the economy grew by 1.7 percent, according to one WEFA study. “There is a lot of emphasis on the skills shortage. But while we need to focus on this we actually need to create more unskilled jobs because the majority of our population is unskilled,” said King.

Analysts believe growth should be encouraged in select sectors that are labour intensive and don’t always require skills, like tourism and construction.