Business

Job creation SA's 'key challenge': OECD

20 July 2010

Persistent low employment is South Africa's "overriding" policy problem, the Organisation for Co-Operation and Development (OECD) says in its first economic survey of the country.

The country has "an extreme and persistent low employment problem, which interacts with other economic and social problems such as inadequate education, poor health outcomes and crime", the OECD says in its survey, released on Monday.

As in other countries, vulnerable groups were most affected by unemployment, and locally the problem was most extreme for young black people, for whom the unemployment rate exceeded 50 percent.

Unemployment back above 25%

While South Africa's unemployment rate had fallen steadily from 2002 through to 2007, helped by the strong cyclical upswing, it had never fallen below 20 percent, and by the first quarter of 2010 was back above 25 percent, near 2004 levels.

When the large number of discouraged job-seekers were included, the country's unemployment rate was above 30 percent.

The survey recommended youth-specific measures be an important part of the country's employment strategy, noting that there was also an increased risk of unemployed youngster contracting HIV or turning to crime.

Wage solutions

Existing job creation programmes such as learnerships – subsidised training with preferences for those hired out of unemployment – suffered from an excessive administrative burden.

A broadened wage subsidy programme, possibly building on improved learnerships, should keep administrative demands light, the OECD said.

"Expanded job search assistance would also be worthwhile, with an upgrading of the public job centres and better linkages to other job-seeker databases."

The OECD also suggested that sectoral minimum wages be differentiated by age to make it easier for the young to break into the job market.

Sapa