Why has unemployment risen in the New South Africa?¹

Abstract

We document the rise in unemployment in South Africa since the transition in 1994. We describe how changes in labour supply interacted with stagnant labour demand to produce unemployment rates that peaked between 2001 and 2003. Meanwhile, compositional changes in employment at the sectoral level widened the gap between the skill-level of the employed and the unemployed. Using nationally representative panel data, we show that stable unemployment rates mask high individual-level transition rates in labour market status. Our analysis highlights several key constraints to addressing unemployment in South Africa. We conclude that unemployment is near equilibrium levels and is unlikely to selfcorrect without policy intervention.JEL classifications: J08, J68, O12. 1 We thank David Deming, Matias Horenstein, Vimal Ranchhod and Paulo Somaini for research assistance and an anonymous referee for helpful comments and suggestions. Special thanks to Jairo Arrow, Jacques deKlerk and the rest of the team at Statistics South Africa for constructing the LFS panel. 716Banerjee ET AL .

Who is accessing public-sector anti-retroviral treatment in the Free State, South Africa? An exploratory study of the first three years of programme implementation

“…Nattrass (2008) hypothesised that South African men with AIDS-related illnesses are less likely to access ART than their female counterparts because masculine norms encourage them to deny weakness and to avoid seeking treatment for any ailment for as long as possible [54]. Another possible explanation for this difference is the fact that the South African employment rate is substantially higher among males (50.5%) than among females (34.0%) [58]. Because each visit to the clinic can be assumed to require a full day off work as a result of the protracted waiting times at the facilities [14,59], the cost of losing a day of work for health care may still be too high [60,61], resulting in the reported under-representation of employed (predominantly male) patients.…”

Inflation Targeting in South Africa: Friend or Foe of Development?

“…Even if one uses the narrow definition of unemployment, it was higher in 2008 (24.4%) than in 1993 (13.7%) (see Table 2). Some studies suggest that overall unemployment rate would be as high as 40% if one used the broader definition of unemployment (Banerjee et al 2008).…”

Accessing the First Job in a Slack Labour Market: Job Matching in South Africa

“…Transitions of the youth out of search unemployment into formal employment are equally distressing. The prevalence of high unemployment rates of African youth reflects the growing inflow of increasingly younger job seekers into the labour market (Branson and Wittenberg, 2007) combined with a low outflow into employment due to the mismatch between low skill levels of the majority of the African youth and decreasing demand for unskilled workers (Banerjee et al, 2008). Thus, for many young African job seekers, search efforts are unsuccessful, prolonging the duration of unemployment.…”

“…Thus, for many young African job seekers, search efforts are unsuccessful, prolonging the duration of unemployment. Eventually, although White, Indian/Asian, and Coloured job seekers are likely to move into formal wage employment, young African job seekers are more likely to move to non-search or non-labour market participation (Ranchod and Dinkelman, 2007;Banerjee et al, 2008).…”

“…Not only do the youth constitute the largest group of the unemployed in South Africa, but also acquiring the first job is crucial in a workers' employment trajectory (Banerjee et al, 2008). To facilitate more active youth participation in the labour market, 2 the South African government has proposed and implemented a number of policies.…”