In the third quarter of 2016, South Africa’s unemployment rate jumped sharply to touch its highest level in eight years.
According to the Statistics South Africa report, as quoted by Bloomberg, Tuesday (22/11), South Africa’s unemployment rate rose to 27.1% compared to the previous quarter, which was only 26.6%. The unemployment rate rose by 239,000 people to 5.9 million people. Even though the number of workers also increased by 288,000 people to 15.8 million people.
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Indeed, until now, South Africa has not been able to cover the high unemployment rate after the economic recession that occurred in 2009 ago. The wheels of the economy are spinning slowly with a growth rate maintained below 3.5% every year.
The poor state of South Africa’s economy has led the government to predict an economic slowdown of 0.5% in 2016. The contributing factors include uncertainty in government policies and instability in the labor market.
“The current situation is that many people are looking for jobs, while many companies are trying to cut budgets so that there is no consensus,” said Kevin Lings, chief economist at Stanlib Asset Management Ltd.
This does not mean that the government has given up on this situation. The National Economic Development and Labor Council, also known as Nedlac, recommends that the minimum wage for workers be US$ 246 per month or the equivalent of 3,500 rand over the next two years.
This recommendation was made in an effort to stabilize the labor market and improve investment ratings in South Africa. But South Africa’s largest trade union rejected this draft proposal. The difficulty of reaching an agreement and a meeting point between the demand and supply of jobs is the main cause of the unemployment problem in South Africa.
According to a Bloomberg survey, currently South Africa is the country with the highest unemployment rate among 60 developing countries.
Going forward, according to the World Bank’s analysis, South Africa needs to pursue economic growth at 7.2% in 2018 to reduce the unemployment rate to 6% in 2030.
Meanwhile, the Minister of Finance of the World Bank, Pravin Gordhan, projects that the economic growth rate will increase by 2% in 2018 and 2.2% in 2019.
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