South Africa Unemployment

By: EconomyWatch   Date: 13 October 2010

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The rate of unemployment in South Africa is one of the highest in the world. It is regarded as one of the most critical socio-political problems faced by the Government of the South Africa. It is estimated that nearly 40% of the South African workforce is unemployed, and more than half of the unemployed population has never been occupied in some kind of employment. Nearly 25-30% of people looking for jobs are unemployed. But as a whole the economic conditions of the country is good.

Unlike other developing countries, where the huge mass of unskilled workers has kept the labor costs low, South Africa Government, in consent with its politically powerful labor unions has not let that happen. The labor work force has been given new protections and benefits. Due to this policy the wages in South Africa are five times higher than that of wages in Indonesia, whereas the levels of productivity is only twice high.

The major problems faced by the South African work force are, crime, improper skill sets and job related knowledge, proper basic education, diseases like AIDS, HIV, etc. In addition to this, the rate of unemployment is different for different groups, which reveals a great disparity in the occurrence of unemployment. The differences in unemployment across different groups have crucial inference for the distribution of income and the incidence of poverty.

It is important to examine the extent to which the differences in the productive and other characteristics of whites and blacks explain the racial gap in unemployment. Though the differences in observed characteristics of the blacks and whites, do not explain all the race-gap in unemployment rate, because two reasons, such as important characteristics that differ between blacks and whites are unobserved and labor market discrimination against blacks. Like, the black and white labor force may have a difference in terms of quality of schooling, which they have experienced at their school-going age. As per the trend the young uneducated Africans living in remote areas are the most susceptible to problems of unemployment.

It is important to observe two most outstanding features of unemployment in South Africa. These are –

First of all, the unemployment rates in the rural sector of South Africa are much higher than that of the rate in the urban areas, which is typical phenomenon among developing countries and it can be easily explained by the policies pertaining to the restrictions on labor mobility.

Secondly, nearly 62% of the unemployed have never been employed earlier, which suggests that the demand-side of the labor market is highly responsible for the status of unemployment in South Africa.

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