The South African unemployment rate has reached a 13-year high at 27.7%, said Stats SA in their Quarterly Labour Force Survey (QLFR) on Tuesday.
“Scarier than that, is that 39% of those who are unemployed have never worked, and those between the ages of 15 and 29 account for half of the unemployed,” said Simon Stockley, managing director of Catalis Holdings.
He pointed out that the current rate of unemployment is high in comparison to the World Bank average of 6.2% for all upper-middle class countries (the category under which South Africa falls).
Stockley explained that the high unemployment rate can be attributed to South Africa’s declining Gross Domestic Product (GDP), which stood at -0.7% during the first quarter this year.
“Put simply the economy is not growing, and without growth we cannot create jobs,” he explained.
According to Stockley, the high unemployment rate is caused by:
- Lack of confidence in the economy
- Political instability (investors are likely to adopt a wait and see attitude in the run up to the ANC elective conference)
- Mismanagement, graft, and corruption across the public sector
- A flourishing and bloated government sector, and corrupt and poorly managed State Owned Enterprises (SOE).
Stockley highlights the importance of acknowledging that South Africa is in an economic crisis, and that everything ought to be done to create growth and confidence in the economy.
He believes that the government should “consider providing additional tax incentives to institutions offering employment and job creation”.
“Without sustained economic growth, a clear government direction, and the adoption of a tax code designed to incentivise job creation, we are facing massive social disruptions,” said Stockley.
“The time for talking is over and all South Africans have to come together to help solve this crisis,” he added.