South Africa cannot count on future economic growth to solve the country’s unskilled and semi-skilled unemployment problem as it predicts the unemployment rate could reach 40% by 2030, according to PwC South Africa's Africa Economic Outlook report for 2022, released yesterday.
This downside economic scenario by PwC is alarming given that, in South Africa, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force. South Africa's unemployment rate was at 33.9% in quarter two of 2022.
PwC notes: “This exclusion of millions of adults from partaking in the country’s economic life is contributing to the decline in social cohesion. This, in turn, is causing an increase in societal breakdown and stability risks associated with protests and unrest.”
South Africa’s economy also contracted by 0.7% quarter on quarter in the three months to June 2022.
The outlook ahead for the economy is not positive.
Investec chief economist Annabel Bishop this week said the outlook had darkened as uncertainty had risen over the onset of a global recession.
Bishop said rising uncertainty was reflected in weakening sentiment indicators for key economies, as well as the recent bear market activity and ongoing downwards revisions to economic forecasts, while recession risk had climbed for some key economies.
The report comes out hot on the heels of Statistics South Africa's Quarterly Employment Statistics on Tuesday, which revealed that the number of people employed in South Africa decreased by 119 000, or -1.2% quarter-on-quarter, from 10 067 000 in March to 9 948 000 in June.
PwC South Africa yesterday said there were 833 000 fewer unskilled and semi-skilled jobs in South Africa compared to the pre-pandemic, 2019 fourth quarter period.
“These workers were more likely to lose their jobs during lockdown and less likely to subsequently regain them compared to skilled workers. Put differently, higher-skilled adults were more likely to have and retain a job during Covid-19,” the report noted.
PwC’s estimates show that employment could grow by 200 000 per year towards 2030. It expected the labour force to grow by almost 350 000 adults per year over the same period.
Lullu Krugel, PwC South Africa chief economist, said: “The exclusion of millions of unemployed adults from partaking in the country’s economic life is contributing to a decline in South Africa’s social cohesion.
“This, in turn, is causing an increase in societal breakdown and stability risks associated with protests and unrest. As seen in many countries globally, at present, when the general population is not prospering, societies are in deep trouble. Real and felt prosperity are absolute requisites for countries or regions to function effectively.”
PwC also said the country’s education system was not producing in-demand workers with the right skills for the job.
Eight out of ten unemployed adults have some secondary schooling or completed matric, while there were also 742 000 unemployed people with tertiary education.
“To improve employability, South Africa needs a national skills vision that includes roles, responsibilities and expectations for every social stakeholder. This includes the private sector who needs to focus on the up-skilling of their employees to remain competitive,” it said.
South Africa also needs to get skilled in line with the 4th industrial revolution.
Christie Viljoen, PwC South Africa senior economist, said:“ Private sector organisations should undertake robust workforce planning to understand the impact technology and automation has on jobs in their industry, and what this means for the skills needed by their workers in the future.
“Up-skilling will be vital to ensuring that local industries are staffed with people who have the know-how to help drive economic growth and development. Our international research shows that, at a company level, offering training and development opportunities has a quantifiable positive impact on company financials. Specifically, these opportunities result in fewer resignations and increased profitability.”
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