pretoria, July 12, 2021 – 13th edition of South African Economic Update: Building back better from COVID-19, We will focus specifically on employment and consider how supporting young entrepreneurs could be one of the ways the country can specifically address the issue of unemployment. An urgent social issue in an environment of slowing economic growth. The Economic Update expects South Africa's growth rate to rebound to 4% in 2021, recovering from a steep 7% contraction last year and the fastest pace in more than a decade. However, medium-term prospects for higher and more inclusive growth remain constrained. Growth is expected to slow to 2.1% in 2022 and 1.5% in 2023.
This report outlines the impact of the coronavirus disease (coronavirus) on the South African labor market. South Africa's labor market is characterized by high levels of unemployment and inactivity even in the best of times. South Africa entered the coronavirus pandemic with low employment levels and a decade of sluggish job creation, well below the standards of most upper-middle income countries, the report said. . Despite the government's robust response to the pandemic, employment has been severely affected and recovery has proven slow.
By the end of 2020, despite two quarters of employment growth, the number of employed people had fallen by nearly 1.5 million, and wages for those who still had jobs had fallen by 10% to 15%. At the time of publication of this report, only 40% of the employment losses had been recovered.
The report finds that despite the government's strong anti-poverty measures through transfer programs that partially alleviated the negative effects of the pandemic, unemployment during the COVID-19 outbreak is disproportionately concentrated among low-income groups. It points out that this is exacerbating already severe inequalities. Low-wage workers were nearly four times more likely to experience unemployment than high-wage workers.
Additionally, the report shows that the COVID-19 pandemic crisis has exposed structural weaknesses in the job market. Young people in particular face severe unemployment rates, with rates twice as high as older people. At the age of 15-24, 63% are unemployed and looking for work, while at the age of 25-34 this percentage reaches 41%. If we include discouraged workers, the unemployment rate rises to 74% for those aged 15-24 and 51% for those aged 25-34.
The report states that entrepreneurship and self-employment offer the greatest opportunities for job creation in South Africa, with a growing number of start-ups, particularly in the digital sector, which will drive future job growth. suggests that it is possible. Cape Town, the “Tech Capital of Africa” alone, is home to more than 450 technology companies, employing more than 40,000 people. In 2020, a total disclosed investment of $88 million (R1.2 billion) was made in technology startups.
“If South Africa were to match its own self-employment rate, its unemployment rate could be halved,” said Wolfgang Fengler, World Bank program leader. “In South Africa, self-employment, including self-employed workers and freelancers, accounts for only 10% of total employment, compared to around 30% in most upper-middle income economies such as Turkey, Mexico and Brazil. .”
“To create jobs, South Africa needs to address three chronic labor market challenges: extremely high inactivity rates, high unemployment rates and low levels of self-employment” Marie-Françoise Marinelly World said the bank's South Africa director. , Botswana, Eswatini, Lesotho and Namibia. “By improving the business environment, entrepreneurship ecosystem, access to finance and investing in skills, governments can encourage self-employment and support the growth of micro, small and medium enterprises. . ”
The report also suggests that South Africa is considering policies that could target labor market outcomes and change the pace of employment recovery. It proposes four interventions that combine time-limited emergency support for poor workers with reforms to increase the size of the labor market.
- Strengthening the labor market linkage of social transfer systems
- consider a negotiated moratorium on certain labor regulations;
- Easing constraints on entrepreneurship and self-employment
- Improving the effectiveness of active labor market programs through broader public-private partnerships and system strengthening.