Why has unemployment risen in the new South Africa?

Falling demand for unskilled labour to blame for South African unemployment

By: Banerjee A, Galiani S, Levinsohn J & Woolard I
Published by: Center for International Development (CID), Harvard University , 2006
Via: Eldis

This paper documents the rise in unemployment in South Africa since the transition in 1994. The paper describes the likely causes of this increase and analyses whether the increase in employent is due to structural changes in the economy or to negative shocks. The authors find that structural changes in the economy are an important characteristic of unemployment in South Africa. The analysis observes that demand for unskilled labour has fallen, particularly in the agricultural and mining sectors. There has also been a large increase in the supply of less skilled labour, partially due to the influx of women into the labour market. The analysis highlights several key constraints to addressing unemployment in South Africa including:

• problems obtaining a first job for school leavers
• a mismatch between where the unemployed live and where the jobs reside
• a mismatch between the skill set of the unemployed and the skills required by the labour market.