More South Africans are living on state welfare than are working. Economist
Mike Schussler says South Africa, the continent' largest, has the highest
unemployment ratio on the continent, with almost 60% of the population of 49
million unemployed and one in four choosing not to participate in the
country's economy – asituation only matched by Gaza, Iraq and Afghanistan.
Presenting the “2010 United Association of SA (UASA) South African
employment report”, Schussler said 13.8 million are currently receiving
various welfare grants, while just 12.8 million people are working and a
mere five million are paying the income tax that funds the payouts.
"Unless more people get jobs there won't be enough taxpayers to pay the
social grants of the future."
The economists.co.za CE explains 40.8% of adults in South Africa are
employed, compared with 83% in Uganda, 80% in Rwanda and 78% in Tanzania and
Malawi. “If South Africa was just able to up its employment numbers to the
average ratio in Africa of 64%, adult employment in the country would have
grown with seven-million jobs," he told a Johannesburg audience.
The Engineering News says employment growth in South Africa's formal
nonagricultural sector added a mere 2% to the employment numbers over the
past decade. "We at least need a 2% growth in employment numbers every year.
This is screamingly bad and shows that the country has been pussyfooting
around in its aim to create additional employment," Schussler commented.
The report showed that fewer people were currently working in South Africa
than before 1994. "With around a million jobs lost over the 
recession, South Africa is still at a net job loss after 16 years of
democracy. Government is currently only protecting older jobs and not
creating new jobs, creating more inequality in process."
Schussler said that people in the country had become so desperate for work
that they had been working free for months in the hopes of getting paid at
the much-shamed Aurora mines. "This desperation is a crying shame,
showcasing South Africa's failure in creating decent jobs even in an African
Meanwhile, he noted that the answer did not lie with employing more people
in central government and other State-owned entities, seeing that it already
employed around 24%. Business Report added the problem lies with the
government, according to Schussler. By increasing its work force and setting
the pace in wage increases, the government is making it unaffordable for the
private sector to employ more people.
Schussler said employment in the private sector had been crowded out because
the public sector paid a premium for labour. Wages in the government sector
rose 53% since 2006, while the private sector paid 49% more than that over
that period. And he pointed out that, during this period, inflation rose
30%. "So real increases were 19% in the private sector and 23% for
Since 2006, employment in the private sector contracted by about 2.9%, while
jobs in the government sector grew by 13.6%. As a result, 20% of the work
force is employed by the government, and 24% by the broader public sector.
Government wages now absorb more than 12% of gross domestic product (GDP) -
one of the highest ratios in the world, Business Report adds. Schussler said
it was higher than the figure for the UK and the US and way above that of
Japan, which was a little more than 6%. It is also higher than Greece,
Italy, and Spain, as well as Ghana, Kenya, and Nigeria. In the past it was
only about 5%.
Sectors in the economy that has shown some measure of growth over the past
four years included government, electricity, water and gas, mining and
transport, while construction and manufacturing showed a large loss in jobs
over the same period, the Engineering News said.
Schussler said that government should stop supporting sectors and deploying
policies for sectors that were not making it and start structuring policies
for sectors that were showing potential for employment growth such as the
In the medium term, Schussler said that continued growth in fixed-capital
formation might be helpful, with economic infrastructure, such as building
roads and dams, being the best option.
However, he noted that in the longer term, education would be an essential
tool to build South Africa's economy and to create decent jobs. "There are
no decent jobs, without decent education," stressed Schussler.
He added that more attention should be given to pulling people through the
system from lower and secondary education through to tertiary education,
which was where the country was lacking.
Lastly, Schussler pointed out that South Africa could create large numbers
of jobs by cutting through the red tape and dropping some of its unnecessary
laws and policies. "Let's open up our skies and make way for more freight
and people to enter our country, or let's get more people opening up radio
stations and generating more advertising, these are simple ideas that will
not cost a lot of money, but will generate many more jobs in the country.
"Fewer laws would mean more hiring, while concrete plans to remove red tape
would make it easier for entrepreneurs to do business and create jobs,"
With acknowledgements to
Other than an excellent Soccer World Cup *, South
Africa has a war economy because it is at war - with itself.
* This being said, I didn't know that watching the game
of soccer could be so boring.
Other than 30 minutes extra time and penalty shootouts, next time they could
consider real shootouts.
Now for the South African Olympics.
After the soccer I'll be watching all the shot put, high jump and triple
jump, inter alia.