From the critical analysis of the current global trends between various countries, there are various macroeconomic perspectives that are hindering the continued developments and growth. One of the primary resultant macro-economic elements that have proved to be detrimental across most developing nations or economies is the aspect of un-employment. To get into a deeper understanding of this prevailing fact, South Africa has been utilized as the main case scenario.
Being one of the newly emerging economies, South Africa is notable for rampant unemployment rates that have progressively established a concrete foundation since its independence (Maseko, n.p.). This review sets basis on the advantage cross-sectional household wealth surveys that have been conducted in the recent decade especially after the political transition in South Africa. The main aim is to gain in greater insights on the causes of subsequent acceleration and increase in an already prevalent high unemployment rate in South Africa. It has been the reason for South Africa’s declining economic growth and development.
The figure highlighted above indicates that South Africa’s employment rate has slightly declined in the past few years. For instance, it can be ascertained that the past three months of the year 2016 has seen a detrimental fall in South Africa’s unemployment by up to 26.5% after the previous year’s 27.1 % (Maseko, n.p.). As much as the aspect of employment is said to have risen, the unemployment rate fell detrimentally and most citizens continued joining the labor force, hence bringing up the rate of participation rate since 2002. In addition, the analysis shows that South Africa’s unemployment rate averaged 25.37% between 2000 and 2016, thereby reaching an extremely high rate of 31.20% within the year2003’s first quarter, as well as the lower record of up to 21.50% in 2008’s fourth quarter (Maseko, n.p.).
The number of unemployed people in South Africa declined by an average of 92,000 by 2016. The job gains may only seem to have occurred in the social service sector, transport, manufacturing, agriculture, trade, private households, utilities, as well as the financial and business services (Maseko, n.p.). Conversely, there was a record of rapid job losses in the construction and mining industries. The trend generally led to an overall decline in the number of persons seeking employment, as well as the availability of employment opportunities primarily due to the rising population levels in relation to the GDP.
From the view, the recently rising unemployment rates were primarily influenced by the previous political transitions from the apartheid rule. The entire transitional frameworks impacted greatly on the overall economic setting that had earlier been established by the colonial masters together with the global harsh economic conditions, thereby leading to the developmental dormancy and subsequent reduction employment opportunities. Furthermore, the observed results have clearly indicated that high unemployment rates facing younger generation are largely fueled by the disadvantages of recently storming into the labor market instead of being attributable to subsequent ages. To be specific, higher household formation and educational attainment decisions across the entire generations tend to enhance the rate of labor supply amongst the recent entrants. Most South Africans are therefore said to be falling between the business cycle and the cyclical unemployment variation.
It is therefore evident that unemployment is certainly interrelated with the business cycle. In South Africa, it can be ascertained that strong added employee effect exists for the black people. It hence gives clear suggestions individuals often fails to enter the household production in upswings as compared to downswings. Based on demand side, upswings tend to manifest cyclical creation of employment.
In the long run, there is clear evidence that younger generations suffer from high unemployment rates as compared to their older cohorts. It is a factor that can be explained based on the steady growth in persons participating in labor force across the generations converging to similar levels regardless of the race. In this case, the most probable reason is that there has been a sharp decline in the demand for the previously utilized unskilled labor becauseof the changing economic structure. The past few years shows that unskilled South African workers that earlier joined the labor market had a high probability absorption as compared to the ones entering the contemporary skill-based labor market. Therefore, the only solution for South African government is to increase its skill-based trainings and the number of industries to best suit the employment demands.
- Maseko, Nomsa. South Africa’s Unemployment Crisis: Begging for Jobs. BBC NEWS. 2016. http://www.bbc.com/news/world-africa-36367703. Accessed 28 May 2017.