Why the current jobs debate fails to grasp the scale of SA’s unemployment crisis

The News24 On The Record summit in Cape Town this week, where President Cyril Ramaphosa will deliver a keynote address, is a welcome opportunity to debate the country’s unemployment crisis.

News24 notes the poll it conducted with Ipsos in 2025 concluded that: “South Africa answered loud and clear: unemployment was the single largest issue holding us back.” The summit could therefore be the most important debate on the crisis since Nedlac hosted the Presidential Job Summit in September 2018.

Many have forgotten that the 2018 summit made a pledge to create 275,000 jobs a year. The challenge announced for this year’s gathering in Cape Town is to find ways of creating “five million jobs in 10 years”, an apparently more ambitious target than the 2018 summit. As we show below, neither commitment comes close to recognising the scale of the crisis.

SA’s economic and media establishment appear, with limited exceptions, reluctant to grasp the extent of the challenge, nor do they seem open to engaging with the bold alternatives that are required to meaningfully confront it. Indeed many are in denial, and appear eager to embrace unscientific notions that unemployment is way lower than official statistics repeatedly demonstrate.

The target of five million jobs in 10 years unfortunately seems to have been chosen without careful consideration of the scale of employment creation needed to meaningfully dent our unemployment crisis. This target demonstrates a lack of understanding of the maths of the jobs crisis: it would fail to create enough jobs even for the annual new entrants into the labour force, let alone the 12.4 million who are unemployed.

Dominated by the usual suspects

Further, looking through the programme, the summit appears dominated by the usual suspects who have largely promoted the economic orthodoxies that have landed us in our current quagmire. It has failed to give a meaningful platform to heterodox economists and economic justice advocates who have advanced serious alternatives on how to turn the economy around and create jobs. Instead, we will continue to be told that we are turning the corner, despite all evidence to the contrary in the daily reality experienced by millions.

While the intentions of the summit are no doubt noble, it will regrettably be a largely mainstream and conservative affair that has already made the problematic and misleading pronouncement that: “The state does not have the funds to create millions of jobs,” suggesting that we need to rely on the private sector to resolve our unemployment crisis.

This assertion reflects the dominant paradigm that turns a blind eye to much of the developmental state experience over the last century, particularly but not only in the Global South, where the state has been central to lifting millions out of poverty, and driving an employment-led growth strategy. Think for example of the Asian Tigers or China. But even the advanced industrial economies relied historically on such state intervention. Have we forgotten about the US’ New Deal or the post-war European Marshall Plan?

South Africans should never normalise the national emergency of unemployment. We need to understand the scale of the crisis and that achieving full employment is the equivalent of a war effort. Unemployment is in the first instance a macroeconomic policy issue. The government – particularly the National Treasury, the SA Reserve Bank and the economic departments – have the policy tools to address the crisis if they choose to.

Other priorities

But the Treasury and the Reserve Bank, currently the two most important institutions in the economy, have determined other priorities – chasing a primary budget surplus and inflation targets. In reality, nobody is taking responsibility for reducing the unemployment rate – a task allocated in many developmental states to a national economic planning centre.

While the Treasury and Reserve Bank are chasing the wrong targets, our economic elites also appear largely oblivious to the scale of the challenge. A basic calculation shows that the target of five million jobs in 10 years would result in a net increase of 2.5 million unemployed in 2035, and an unemployment rate of 40.4%! This apparently counter-intuitive result is easily understood as follows:

On the supply side, the labour force growth rate multiplied by the number of people in the labour force is equal to the annual new entrants into the labour market. Over the next decade we project that there will be a labour force growth rate of 2.3% a year, slightly lower than the six-year annual average before the start of the Covid-19 pandemic, which resulted in a severe dislocation in the labour market.

On the demand side, the GDP growth rate times the employment multiplier equals the employment growth rate. Over the past 17 years there was a (low) employment multiplier of about 0.8 times (meaning that for every 1% of GDP growth an additional 0.8% jobs were created).

Over the next decade until the fourth quarter of 2035, the labour force will increase by 7.5 million people – an annual average of 754,000 new entrants into the labour market – from the current 29.5 million to 37.1 million.

The target for the Cape Town summit is to increase employment by an average of 500,000 a year (250,000 lower than the new labour market entrants). This is equivalent to an employment growth rate of 2.6% a year. The GDP growth rate that is required to achieve this target is 3.3% a year. According to this scenario, the number of unemployed people will actually increase by 2.5 million to 15 million in 2030, and the unemployment rate will only decline marginally from 42.1% to 40.4%. The Cape Town pledge, if realised, would therefore not make much difference, to put it mildly.

Given the current composition and trajectory of economic growth, SA would need in a second scenario to achieve a GDP growth rate of 4.6% a year just to create jobs for the annual new entrants into the labour market until 2035. In a third scenario, with a GDP growth rate of 6% a year, the economy would create 10.2 million jobs over the next decade. The number of unemployed people would decline to 9.8 million, and the unemployment rate would still be very high, at 26.3%.

Crucial moves

These scenarios show how crucial it is to increase the employment intensity of growth, massively diversify the economy, expand public employment programmes, and create a universal social protection floor.

Structural reforms, aimed at improving the functioning of network industries to service business, are important, including to ensure public services are accessible to all South Africans. However, the one-sided focus on supply side measures to redress the ravages of State Capture do not amount to an economic strategy to fundamentally transform our economic growth path, or address the crisis of unemployment. To suggest it does is magical thinking.

Structural transformation of our economy would require a rupture with our semi-colonial growth path of excessive dependence on exporting our mineral resources; building our manufacturing sector, ensuring industrial diversification, and promoting a far higher employment intensity of economic growth.

Additional employment scenarios would combine active macroeconomic policy coordination with an aggressive industrial policy, public employment and a social protection floor, resulting in a far greater absorption of the unemployed.

International and South African evidence show that this economic policy combination can significantly raise the employment multipliers of public and private investment. It is widely understood that investment in productive activity (with a strong bias towards labour intensity), and infrastructure, can have high employment multipliers. However, it is less commonly realised that cash transfers have been shown to have high economic multipliers with strong employment impacts, particularly in developing and unequal societies.

Dual advantage

Addressing the scale of the employment challenge through a deliberate combination of these economic policy tools would have the dual advantage of large-scale employment creation and providing a public employment and social protection floor for those unable to be absorbed in formal employment.

Yes, we need to appreciate the nature of the challenges (and opportunities) arising from the volatile global environment, and the emergence of greater multipolarity, as well as the impact of new technologies and AI on employment. At the same time, we must be bold in our ambitions to confront the real scale of our employment challenge, and create the economic policy scaffolding to ensure that we unleash the productive potential of our country and our people. DM

Duma Gqubule is an adviser on economic development and transformation. Neil Coleman is the Institute for Economic Justice Senior Policy Specialist and Co-Founder.