Unemployment in Sa

Unemployment, a continuous concern in South Africa, has always been a major issue in attaining economic stability in the country through rising unemployment rates. Rising unemployment rates are a source of considerable concern to both policymakers as well as various components and participants of the labour market (Burger, 2009). With the South African economy strong in Southern Africa the problem of unemployment still remains a crucial social and economic issue that needs to be addressed politically, social and economically. This research paper aims to outline the factors affecting the persistently high unemployment rates and the various arguments surrounding unemployment in South Africa.

According to Barker (2007), an unemployed person is a person who is without work, is currently available for work, and seeking work or wanting work. However, there exists variation with regard to the definition between the official definition and the expanded definition, hence contributing to different figures of the rate of unemployment in South African and consequently different statistics are utilised by these different institutions. Although major institutions and experts such as Stats SA, COSATU, the Reserve Bank, the National Treasury, the Office of the Presidency, the Department of Labour, the Department of Trade and Industry and others measures the rate of unemployment, the Labour Force Survey, who uses the expanded definition of unemployment, is the foremost body to determine unemployment rates. According to Barker (2007), unemployment is defined as those people within the economically active population who do not work during the seven days prior to the interview, want to work and are available to start work within a week of the interview and have taken active steps to look for work or start some form of self-employment in the four weeks prior to the interview. Unemployment rates vary accordingly to the definition that is used to define it, resulting in a considerable variance on the strict definition and the expanded definition. According to Stats SA, the rate of unemployment as per the 1st quarter of 2011 was 25.0%. This is the rate as per the official definition, however according to the expanded definition of unemployment, which includes all people who want to work regardless of whether they are actively looking for work, the number of unemployed people grew from 6 609 000 in 2001 to 7 532 000 in 2011, and the unemployment rate rose from 34.6% to 36.5%.

The problem of unemployment in South Africa is very complex. Although the economy has experienced some positive growth since 1993, the unemployment situation is deteriorating.With unemployment rates consistently among the highest recorded globally, one may argue that the apartheid regime may have a considerably effect on the lack of the availability of jobs in the South African labour market. Terrablanch (2002) is of the opinion that current nature of the South African labour market originated from the brutal oppression of the apartheid era that marked the emergence of forced employment and unpaid labour, as well discriminatory labour. According to Terrablanch (2002), the segregated system of education for various levels of literacy and schooling of the different population groups and the large qualitative difference between these different types of education, should be blamed for the undersupply of certain categories of the skilled and professional labour market as well as the oversupply of the other categories. The current unemployment disaster experienced in the South African labour market is said to have originated from the racial discrimination that occurred in the apartheid era. Bendix (1996) is of a similar opinion. He regards the present condition of the South African labour market is attributed mainly to the past practices which hampered the achievements of the technical and educational qualifications by Blacks.

This reasoning provided by Terreblanch is a fairly accurate, as the same opportunities that were made available to the whites, in this case most notably education, were not as easily accessible to non-whites. The lack of education and the education system in South Africa as a whole is believed by many to be the main cause of the high unemployment rates experienced in the country. This argument is supported by the percentage of Africans which occupy the total unemployed workers, which lies at 85.7%. However, not all the blame regarding the lack of education is placed on discrimination and apartheid. Kirk (2011) as well as Cowen (2012) believe the primary causes of structural unemployment in South Africa are poor education standards and policy. The following figures were obtained from the census 2007 (refer to figure 1):

? The unemployment rate for those with less than "matric with university exemption" is between 30% and 40%.

? The unemployment rate for those that have achieved Matric with a University exemption is 23%

? The unemployment rate for those with better than "matric with university exemption" is on average below 10%.

Figure 1

A further analysis of Figure 1 reveals the following:

1. A matric/national certification without university exemption subjects and marks is poor preparation for employment. 18% of the labour force possesses it, but a third of them still remain unemployed. In 2007, this group represented over a million unemployed South Africans.

2. Almost half (44%) of those with Standard 9 / Grade 11 and wanting to work are employed. This illustrating that leaving school without a national certificate is considerably worse than the already poor statistic of holding one.

3. Only 50% of those with Standard 9 / Grade 11 are part of the labour force. This value changes to 68% for those entering Grade 12 and to 77% for those completing high school without a university exemption, suggesting that it is more likely a significant proportion of those out of the labour force are discouraged workers, amplifying the real employment problem with this education level.

Kirk (2011) recognizes the following issues that surround our education system:

? Although the enrollment levels have increased, the standards of education have dropped

? While enrollment has increased, the percentage of GDP spent on education has dropped from 6.4% in 1994/1995 to 5.3% in 2006/2007. This is partly explained by an increase in government spending in total related to social programmes. The real expenditure per learner has increased by approximately 5% per year from 2000 to 2007. A high proportion of the government's budget is been spent on education, but with poor outcomes. This could be due to the ineffective and inefficient spending.

? Our levels of education are not of an international standard

? Standards are too low so that passing isn't sufficient for further education / job placement

From the above analysis, it is evident education is key to unemployment and economic growth. Government needs to recognise that education is the most important long-term solution to structural unemployment as skilled citizens are largely employed and unskilled citizens are unemployed at levels ranging from 30% to 40%.

Le Roux (2012), on the other hand, describes the widespread, persistent and elevating levels unemployment in South Africa as an unnatural situation. He is of the belief that an artificial divide is existent between an employers' propensity to hire and an employees' propensity to accept employment. Le Roux (2012) explains that the prospective employee has at any time a minimum required wage in mind for a specific job, known as a reservation wage, and correspondingly the prospective employer has a maximum wage in which the employer is willing to offer. If the employer and the employee can reach an agreement between their acceptable offer ranges, there exists an "employment window". In this "employment window", each party gains more than what they were willing to accept, resulting in mutual profit.

Trade unions like Cosatu, amongst other things, partake in the bargaining process on behalf of its members so that an agreeable position within the employment window can be attained. However, it is a quite natural and common occurrence for there to be no employment window between many prospective employers and employees and thus an agreement not being achieved. A prospective employer may, for example, want someone with a certain skill set to do a certain job, but offers too little in compensation, so that an active job seeker declines the offer, since it's below her reservation wage (Le Roux, 2012).

In contrast to the natural, regular occurrence of the above described situation, Le Roux (2012) explains that there exists an unnatural unemployment problem. This occurs when a third party's, i.e. a trade unions, demands raise the minimum remuneration a prospective employee can accept and/or lower the maximum remuneration a prospective employer can offer, narrowing or closing the employment window. Le Roux (2012) believes this unnatural unemployment situation is strongly exhibited in South African labour markets, the intricacies of which are not accessible for precise quantitative analysis because of the dynamic nature of society, but are nevertheless are vastly existent. Loane Sharp, an Adcorp labour market analyst, said trade unions also appeared to discourage work. Referring to Statistics SA's Quarterly Labour