Pretoria - South Africa's high unemployment rate reflects a rigid labour market and central bank policies can do little to lower the stubborn jobless rate, Reserve Bank Deputy Governor Lesetja Kganyago said on Friday.
The official jobless rate was stuck at 25.4 percent in the third quarter, leaving 5.151 million people without work. Including people who have stopped looking for jobs, unemployment is at nearly 36 percent in Africa's most advanced economy.
“The nature of unemployment in South Africa is emanating from the structural constraints that we are facing and there is pretty little that monetary policy could do to sustainably bring down unemployment,” Kganyago, who will take over as central bank governor next week, said in Pretoria.
“There are rigidities in our own labour market.”
Unemployment remains high despite the government's nine billion rand jobs fund launched in 2011 to encourage companies to create new jobs in a country where one in four people has been without work for about a decade.
The government says it has spent about 5 billion rand of the money on 91 projects aiming to create about 160,000 jobs over the next 5 years.
Speaking at a conference on inflation targeting, Kganyago also said the central bank's flexible inflation target band of between 3-6 percent had served the country well.
Responding to inflationary pressures fuelled by a weak rand exchange rate this year, the bank has hiked interest rates by 75 basis points to 5.75 percent and said it is embarking on a gradual tightening cycle.
The bank's Monetary Policy Committee (MPC) will meet in two weeks to take its last scheduled interest rate decision of the year.
The rand has fallen five percent against the dollar so far this year.
It was pushed to 11.0050 on Friday as the dollar strengthened against emerging market currencies.
Speaking at the same conference, Governor Gill Marcus said emerging markets have carried some of the load of the financial slowdown and the United States Federal Reserve should consider the impact of their policy decision on emerging markets.
“We are now seven years into this crisis. Emerging markets actually carried the load and they are more than 50 percent of the global economy today,” she told global central bankers and market players in Pretoria.
“Therefore I think it behooves bodies like the Fed that they have a responsibility,” she said.
“In the end, the Fed will take decisions about what is in the best interests of the United States ... but it cannot ignore the fact that it has an impact on emerging markets.”
Kganyago will take over from Marcus as the governor of the Reserve Bank after the end of her term on November 8. - Reuters