Unemployment even worse than the gloomy official numbers – Solidarity

Institute says govt is causing the problem with counter-productive policies

Unemployment even worse than the gloomy official numbers 

1 August 2019

Solidarity expressed its concern about the ongoing, seemingly never-ending increase in the unemployment rate. Solidarity also questions the methodology of Statistics South Africa (SSA), which excludes discouraged job seekers from their official unemployment measurement.

Morné Malan, senior researcher at the Solidarity Research Institute (SRI) explains that there is strong evidence to suggest that the figures, as contained in the latest release of the Quarterly Labour Force Survey (QLFS), though alarming, still paint a rosier picture than the reality many South Africans experience.

Malan argues that: “Although the use of the narrow or strict definition of unemployment is common practice around the world and also recommended by the International Labour Organisation (ILO), there are several reasons to believe that this measurement is inaccurate for South Africa’s labour force, among other things, due to the fact that:

- South Africa has an exceptionally large gap between the narrow definition of the unemployment rate (29,0%) and the expanded definition (38,5%);

- we have a particularly low labour absorption rate (42,4%); and

- a 2013 study at the University of KwaZulu-Natal indicates that so-called discouraged jobseekers, who are not counted as unemployed in the official rate, are in no way less likely to be employed than so-called active jobseekers.”

Solidarity emphasises that methodological debates around unemployment are critically important, since policy can only be effective when it has an accurate foundation to build upon. Malan said that it is extremely difficult to suggest solutions to problems when everyone has a misconception about the extent and nature of the problem discussed.

In conclusion, Solidarity states that a 38,5% unemployment rate demands even greater action from government to tackle the challenges of structural unemployment. “The government is causing the problem with counter-productive policies such as minimum wage, strict labour legislation, intensified enforcement of Black Economic Empowerment, and many more. The only solution to the problem is for government to eliminate these barriers to doing business in South Africa. Otherwise, I fear that unemployment, which is accompanied by countless other social and economic issues, will never be resolved,” Malan concluded.

Issued by Morné Malan, Senior researcher, Solidarity Research Institute (SRI), 1 August 2019