South Africa’s economy: No jobs, boys

The unemployment rate refuses to come down – Published on The Economist, Feb 24th 2011.

THE ruling African National Congress (ANC) came to power in 1994 on a promise of “Jobs, jobs, jobs!” But ever since then the number of jobless, including those too discouraged to keep looking, has hovered around 30%. Participation in the labour force is a good 10-15 percentage points below other comparable developing countries. In 2004 the government pledged to cut unemployment in half by 2014. But the best it can now promise is to do so more or less by 2020 … //

… Under proposed labour laws, recently approved by the cabinet, employers would no longer be able to take on short-term staff save in exceptional circumstances. Temping agencies would be abolished and companies would be required to register all vacancies with government labour centres.  

The new laws also seek to tighten existing legislation on affirmative action, decreeing that black South Africans must constitute at least 60% of senior management by 2017, up from 26% at present. Hiring skilled foreign workers would become more difficult. Violating these laws would result in a fine equivalent to 2-10% of a company’s annual turnover.

Africa’s biggest economy and most stable democracy still has a lot of attractions, including its banking system, auditing standards, securities regulation and corporate governance. Indeed, some international analysts are predicting a very bright future. Barclays Capital, an investment bank, lists South Africa as one of the top ten “advanced emerging markets”, describing it as part of a “new breed of countries poised to exhibit solid and stable growth”. PricewaterhouseCoopers, a consultancy, expects South Africa to be the world’s seventh-fastest growing economy up to 2050, with growth averaging 5%. Perhaps. But how many jobs will it create? (full text).

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