/ 4 March 2021

Will job creation schemes fix the unemployment crisis?

Parliament's public service and administration portfolio committee warns it is unlikely government will meet its 2014 national employment target.
Job creation was a major topic in last week’s budget, which was released the day after South Africa’s devastating unemployment statistics made headlines.

Job creation was a major topic in last week’s budget, which was released the day after South Africa’s devastating unemployment statistics made headlines. But professionals say there is no evidence yet to show that government-funded job schemes are a long-term solution to the country’s unemployment crisis. This question is currently being researched. 

Despite South Africa being on the road to economic recovery — after a year-long Covid-19 pummelling — there were still 1.4-million fewer jobs at the end of 2020 than before the pandemic.

Finance Minister Tito Mboweni’s budget reflected this state of affairs and pointed to job creation as a key to the country’s recovery. 

According to the treasury’s budget document, the government plans to create 610 000 jobs this year through a public employment initiative. In the short term, this means adding R11-billion to the spending framework.

President Cyril Ramaphosa announced the initiative last year. The initiative is aimed at creating short-term employment.

Although job creation will receive a budgetary bump in the next two years, this will be scaled back by 27% in 2024.

Other jobs will come from the government’s infrastructure build plan, creating employment for 489 950 people. But most of these jobs will last only as long as the construction work continues. About 69 400 have been confirmed as direct jobs, and 13 900 will be indirect. The budget did not specify the nature of 25 750 government-driven jobs.

Lauren Graham, the director of the University of Johannesburg’s Centre for Social Development in Africa, said government-funded job creation schemes are important because they connect people to the labour market. 

These initiatives are also crucial mechanisms for providing income support, Graham added. 

But, she said, these employment initiatives tend to be underused because they often fail to move people from temporary forms of employment to more permanent opportunities. 

There is not yet evidence that these schemes will have a long-term positive effect on employment, although Graham said this is currently being researched. 

“That is something that we are definitely looking into.”

Bianca Chigbu, who holds a PhD in the sociology of work and economics from the University of Fort Hare, agrees that it is difficult to tell whether government-driven job creation efforts will plug unemployment in the long term. For now, they create opportunities and boost consumer power, but there is little evidence of what will happen to the benefactors of these schemes when they come to an end, she said.

But, said Chigbu, it is important to note that the government “is not silent on creating jobs for its citizens”, and any support is good.

She added that even if the government can carry the economy through the Covid-19 crisis, unemployment will continue to be a problem because unemployment was climbing pre-Covid. 

“We were not even recovering before Covid. We were sinking and sinking.”

If the labour market is to recover, the government needs to figure out what was causing its decline before the pandemic, Chigbu said.