The challenge of low employment economic growth in South Africa: 1994 -2008

Abstract

The formal sector in South Africa is unable to provide adequate employment for labour although the economy registered positive economic growth rates over the past 15 years since the demise of apartheid. This is a critical problem, given the current recessionary climate and recent developments in the economies of our trading partners. While government has responded with many initiatives to deal with employment creation, unemployment rates remain high. This problem is examined by reviewing South Africa’s growth performance and links to employment and posits various alternative strategies. The growth elasticity of employment is found to be rather low over the 1994-2008 period, and even over a longer time horizon the marginal growth employment effect is found to be rather weak.