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Business Day, Johannesburg, 20 October 2006



Poverty only part of SA’s unemployment monster



Neva Makgetla

MEET two people who are typical of SA’s jobless. Nhlanhla is 23, dropped out of school in grade 11 to have a child, and has since searched sporadically and fruitlessly for employment.

She lives with her mother, who earns R1500 a month as a clothing worker. Nhlanhla still has a fairly wild social life, if only because she doesn’t have to get up for work in the morning.

Abie lives in the former Transkei. He is 40, with only four years of education. He stays with his mother, a sister and her children. They live off remittances that a brother and sister send from Cape Town, his mother’s old-age pension, and some trading and gardening. He hasn’t looked for a job in years, because he knows it’s hopeless. The family goes hungry regularly when the pension money runs out.

These two stories point to important but often overlooked aspects of the unemployment crisis.

To start with, the formal unemployment figures significantly understate the number of people who need paid employment but don’t have it.

In line with international norms, the official data count as unemployed only those who are actively seeking work. Under these standard definitions, Nhlanhla is unemployed, but Abie is economically inactive.

The importance of this distinction in tracking employment needs emerges when we compare the former homeland areas to the rest of the country. In the former, only half the working-age population is either employed or actively seeking work. In contrast, in the rest of SA this figure — called the labour-force participation rate — rises to 69%, which is the average for middle-income countries.

The low participation rate in the former homeland regions poses a quandary for policy makers. It means that as employment creation accelerates, more people will likely start looking for work.

By extension, the Accelerated and Shared Growth Initiative for SA (Asgi-SA) aim of halving unemployment by 2014 is a moving target. If the participation rate remains unchanged and the economy continues to create jobs at the current rate over the coming decade, SA would meet the target. However, if the participation rate in the former homeland areas rises to the national norm, formal job creation would have to accelerate by around 50% to some 5% a year in order to achieve the Asgi-SA goal.

The location of the new jobs is also important. Two out of five jobless people are in former homeland areas. But job creation there has stagnated, although it has grown substantially elsewhere. Moreover, even among the employed, two-thirds earn less than R1000 a month.

Unless the challenge of slow and poor-quality job growth in the former homeland areas is addressed, the consequence is likely to be accelerating rural-urban migration. In addition, many homeland households would continue to need social grants despite improved job creation.

Still, while poverty is deepest in the former homelands, urban young people form the largest group of unemployed. Youth under 30 make up 36% of the working-age population and 31% of the employed. But they constitute an extraordinary 62% of the unemployed.

As a result, most unemployed people are young, fairly well educated, and have never had a job. The average unemployed youth has 11 years of formal education, admittedly often of poor quality. Three-quarters have not been employed since leaving school.

Unemployment harms young people as much socially as economically. Young adults cannot go through a normal process of growing up. Instead, they stay dependent on their families at an age where they should be moving out and engaging in society as independent adults. This situation certainly contributes to violence, teenage pregnancy and drug use.

Some 85% of unemployed youth are supported by their families. This does not mean that they are well off — even in the former white territories, half of all unemployed people live in households that spend less than R800 a month. In the former homeland regions, the figure rises to 70%.

As a minimum, unemployed young people should have the chance to engage socially through community service and cultural activities. Providing opportunities on the necessary scale would require a massive expansion in current programmes. But it could go far in improving social cohesion as well as the quality of life for the unemployed.

  • Makgetla is sector strategies co-ordinator in the Presidency. This article reflects her personal views only.

From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A294121

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