South Africa’s ticking time bomb

The United Nations Development Programme (UNDP) has warned that South Africa’s high unemployment rate, particularly among its youth, is a “ticking time bomb” that could result in social unrest.

The UNDP released its South Africa National Human Development Report for 2022 on Tuesday, which focused on analysing South Africa’s youth employability.

“Youth unemployment in South Africa is a multipronged challenge that limits the earning potential of youth, stymies business growth, threatens social cohesion, and puts pressure on public resources,” the report said.

“There is no doubt that the high unemployment rate is a ticking time bomb.”

The Spectator Index’s 2023 youth unemployment rate list reveals that South Africa has the worst youth unemployment among all included countries.

South Africa has over 10 million young people aged 15-24 years. Of these, only 2.5 million were in the labour force, either employed or unemployed.

The largest share, 7.7 million or 75.1%, of this group of young people are those out of the labour force.

The main reason for being inactive is discouragement, which means they have lost hope of finding a job that suits their skills or in the area they reside.

37.% of this group were disengaged from the labour market in South Africa. These are regarded as youth, not in employment, education or training.

There has been an increase in the not in employment, education, or training rate for both males and females.

The UNDP also warned that South Africa is at risk of another lost generation through the erosion of skills and human capital that comes with prolonged unemployment.

Financial advisory firm PwC pointed out that unemployment is on an upward trend due to structural constraints that limit growth, particularly load-shedding and deterioration of logistical infrastructure.

These constraints limit potential economic growth in the country, and given the relationship between economic growth and employment, unemployment will rise.

The accounting firm’s baseline growth rate for South Africa is 1.3% per annum over the long term.

This is barely above South Africa’s population growth rate of 1% per annum, meaning incomes will remain stagnant in the long term.

With high inflation, South Africans will be getting poorer in real terms.

Due to South Africa’s poor economic growth, PwC anticipates the country’s unemployment rate increasing from 32.7% at the end of 2022 to 35.5% in 2030.

This is the baseline scenario. The downside scenario has the economy growing at a mere 0.9% per annum for the next decade. In this case, unemployment will rise to 37.2% in 2030.

Even in the upside scenario, PwC sees unemployment rising to above 34% at the end of the decade.

If South Africa fails to address unemployment, it will face growing social unrest, PwC warned.

This article was first published by Daily Investor and is republished with permission.

Photo by Masego Mafata for GroundUp. Licensed under CC BY-ND 4.0.

Now read: Good news for IT jobs in South Africa

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South Africa’s ticking time bomb