Jobless economic growth set to continue, survey finds

Unemployment will remain South Africa's greatest challenge in the decades ahead, according to a survey of business leaders and economists.

The report, 'Projection of Future Economic and Sociopolitical Trends in South Africa up to 2025', compiled by the University of South Africa in Pretoria, noted that although industrialists were generally "very upbeat" about growth prospects, there was great concern by economists over the widening skills gap.

The 13 eminent economists participating expected an average growth rate in excess of 3 percent per annum between 2005 and 2010, rising to 3.6 percent per annum for the period between 2011 and 2025.

But the panel of economists had "raised concerns about the low elasticity levels between output [GDP] and employment growth, with expected overall percentage growth in employment about half that of GDP up to 2025", the researchers reported.

South Africa's unemployment rate is between 30 and 40 percent, depending on which definition of 'unemployed' is used, and the country cannot afford economic growth without job creation, said Professor Carel van Aardt, one of the report's authors. "The economy is not creating jobs - to a large extent it's jobless economic growth," he pointed out.

Highly skilled workers who could participate in the "knowledge economy" were benefiting the most from South Africa's economic growth, but "for the lower skilled and unskilled - their labour absorption capacity is still on the decline, and that's leading towards higher levels of unemployment among them," Van Aardt noted.

In an effort to create employment opportunities for unemployed semi-skilled and unskilled South Africans, the government launched its much-publicised R100 billion (US $16 billion) Expanded Public Works Programme (EPWP) in 2004.

The EPWP aims to improve and extend infrastructure and social services, while reducing unemployment by creating 200,000 temporary jobs annually over a five-year period. However, analysts have argued that that these "short-term jobs" were unlikely to have any significant impact on poverty and would do little to improve the skills levels of workers.

Demand for unskilled or semi-skilled labour was diminishing. "GDP contributions by the manufacturing sector and service sectors have grown dramatically over the past two decades, and indications are this will continue to increase, which means a greater demand for highly skilled people and less demand for labour in mines and in agriculture," Van Aardt commented.

This was problematic, as the bulk of South Africa's labour supply belonged to the lower- to middle-level skills groups. Secondly, the mix of skills in South Africa was skewed towards the "soft sciences", while the economy was in desperate need of people with technical skills. South Africa had to learn from the experiences of other countries that were successfully bridging the skills gap.

Van Aardt noted that The Singapore Economic Development Board "identifies trends in the economy on a continuous basis and ... which skills are required, and feeds that labour market information back to the broad populace". The board also fostered a strong relationship with polytechnics in Singapore "and feeds them information on which courses should be presented, and where the economy is heading".

In Ireland, he said, "they subsidise certain forms of education, especially scientific and technical education, and derive these subsidies from people studying soft sciences - in other words, you pay more to study to be a psychologist than an engineer".