Low business confidence is the single most important barrier to investment in South Africa, which has directly led to low employment growth, says the Department of Planning, Monitoring and Evaluation (DPME).
In a presentation to parliament this week, the department said much of this stems from inefficient network infrastructure, including:
- Supply-side constraints, including administered prices such as electricity, rail, port tariffs due to high costs;
- Weak execution of the government plans, including delays in auctioning of high demand spectrum, which has resulted in allocative and productive inefficiencies;
- Policy uncertainty and inconsistency, especially in key sectors such as mining
- The slower pace of Covid vaccinations.
The department also flagged poor delivery of basic services and crumbling infrastructure at a local level as key hurdles to job creation efforts.
It cited the recent water crisis in the Lekwa Municipality in Mpumalanga which affected poultry farming and increased production costs for the region’s biggest job creator Astral Foods.
It added that poor administration and crumbling infrastructure also led to Clover closing the country’s largest cheese factory in Lichtenburg in the North West.
Other hurdles to job creation that were flagged by the department include:
- Sub-optimal use of public procurement as an industrial policy lever as the government has failed to use its buying power effectively;
- Illicit trade and fraud issues such as under-invoicing, misdeclaration, and customs duty circumvention;
- Skills and education constraints lock out young people from the job market – particularly in technology and innovation.
South Africa’s unemployment rate reached a record high of 34,9% in Q3 2021, with 7.6 million people looking for work.
The high unemployment rate among the youth remains a major concern in South Africa as youth continue to account for the largest proportion of unemployed people.
Youth aged 15-24 years and 25-34 years recorded the highest unemployment rates of 66.5% and 43.8% respectively in Q3 2021. About 3.4 million (33,5%) out of 10.2 million young people aged 15-24 years were not in employment, education or training (NEET).
Statistics South Africa has not published updated jobs data for the country after missing its original February 2022 deadline.