The Portfolio Committee on Labour received an overview of the South African labour market (unemployment rates, jobs per sector and 2015 quarterly employment trends) by the Financial Fiscal Commission. The FFC noted there was a close association between the economic growth rate and the unemployment rate. When economic growth was strong during the 2000s, the unemployment rate declined but with economic growth weakening, unemployment is starting to increase.
In its presentation, the FFC highlighted the following:
The majority (54%) of jobs are based in the Community, Trade and Manufacturing sectors.
The main sources of employment creation last year was in the Agriculture in spite of the drought) and Construction sectors
Employment increased by 190 000 in the last quarter of 2015, up slightly from the 171 000 increase recorded in the third quarter
There was an encouraging 250 000 increase in the formal sector employment in the fourth quarter on a quarter-on-quarter basis
The average annual negative employment growth in the Manufacturing sector from 2008 to 2015 is concerning, because this sector has been earmarked for its employment creation opportunities.
The National Development Plan (NDP) recognises job creation as a key driver for accelerated growth and a higher standard of living. The NDP set the targets to reduce the unemployment rate to 14% by 2020 and to a further 6% by 2030. The NDP highlights that workforce capabilities must improve, bargaining and labour relations should be stabilised, a move away from resource-intensive to more energy efficient labour-absorptive industries should be promoted and economies with high potential for job creation should be supported.
The FFC said that the South African labour market faces a number of critical challenges that need to be addressed if the economy is going to create the level of jobs required by the NDP. Labour market challenges include a skills mismatch (possibly a result of disconnect between industries and the education system), restrictive labour legislation in terms of global standards and an adversarial collective bargaining system. In addition, with economic growth expected to decline over the medium term, budget allocations to the Department of Labour are growing at a slower pace compared to previous years.
Access the full meeting report here and see infographic below for an overview of the South African labour market: