Economic Growth and Unemployment in South Africa

This assignment examines the factors influencing economic growth and unemployment in South Africa. It defines key economic indicators, discusses types of unemployment, and explores both supply-side and demand-side policies aimed at mitigating unemployment.

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Date: 11 October ,2017

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Contents
Question 1…………………………………………………………………………………….2
Question 2…………………………………………………………….……………………..2
Question 1…………………………………………………………………………………….4
Refrences……………..…………………………………………………………...............6
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1)Economic growth is accelerated by a variety of factors and that may vary from country to country.
The economic growth is an indication of the overall growth and development of the country with the
use of all the resources that are present with it. The major indicators of good economic growth includes
a positive GDP, the PPI, the rate of inflation, the current currency rate and few other demand and supply
statistics. These indicates whether or not the economy is performing up to the mark and is providing its
people with the best of resources and services in terms of good living conditions, better job
opportunities and better work life balance. In case of South Africa, the country has one of the biggest
industrialized areas in Africa and has been termed as the upper middle economy. The main income
source of the company is from heavy export of goods and services that amount to more than 25 percent
of the overall economy in the country. The other key drivers of a strong economic growth includes
better job opportunities, low rate of unemployment, better education facilities so that more and more
people are educated and can contribute to the overall development (Salahuddin & Gow, 2016). Growth
of specific industries like tourism, financial services, and service industry also helps in the growth of the
economy and helps in providing people with better living conditions. It can be said that people makes
the economy, if there is an individual level development of people who are living in the country it will
help in the overall economic growth of the nation (Cornelissen, 2016).
2)Unemployment can be defined as a phenomenon in which the person is unable to find any kind of
job even though he has been searching for it desperately. It is one of the most popular measures of the
overall health of the economy. An economy in which the unemployment rate is high is a poorly
functioning one and it shows that the growth of the economy is very adverse. It is important that there
must be more job opportunities so that people are able to make their own living and also help in the
growth of the nation. There are many types of unemployment, the three major types are –
 Structural Unemployment- It is a situation in which because of certain changes in the
overall economic scenario, the demand for a key job skill increases and demand for
other skills decreases. This creates unemployment for the unwanted group of people
not processing the desired skills.
 Frictional Unemployment – It occurs when the workers are switching jobs and looking
for better opportunities so it causes friction between the job change. The workers are
always looking for better job opportunities that will help them grow and also some
switch to other geographical location in search of better job opportunities. All these
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might affect their work and they might need time to settle down in new jobs and new
work locations (Elimam, 2017).
 Cyclical Unemployment- It occurs due to overall changes in the business scenario in the
economy, it is not part of the basic unemployment rate. It occurs when there is a steep
decrease in the overall demand of goods and services and that might end up affecting
the overall job conditions and can lead to lay off large number of workers. It might lead
to more unemployment because the workers who are unemployed spend less money so
that might end up affecting the overall scenario more.
There are other many types of unemployment like seasonal unemployment, real
unemployment, natural unemployment etc. All these affect the overall economic
condition of the country.
In case of South Africa, unemployment plays a major factor that affects the overall economy.
The present rate of unemployment in South Africa is 27 percent. The population is suffering from
chronic joblessness and the average rate of unemployment has been stagnant over the years. It can be
seen that there are large number of people who have never worked in their life and many youths finds it
difficult to find their first job. There are also the elderly people who have some work experience but are
unable to find a job change or are considered unemployable by the economy (Sisk, 2017). It can be said
that the major cause of unemployment in the country is mainly stagnant economy in which there is a
demand for a particular job skill and that renders many youth unemployable. It is important that the
government should try to create more job opportunities for youth between the age brackets of 18-30.
The main reason is that the overall hiring and training process is not efficient enough and that affects
the employment rate. The main thing to be done is to boost youth employment rate so that they might
help in the growth of the economy and contribute accordingly.
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3) Major supply side policies to reduce unemployment are-
 Proper job information must be circulated so that friction between jobs in
reduced.
 The overall flexibility in the labor market must be improved.
 Proper training must be provided to the unemployed people so that they can
get good jobs.
 Low unemployment benefits must be given so that people are encouraged to
secure a job.
 The overall power of the trade unions must be reduced to reduce any kind of
biasness in the work of the companies.
Major demand side policies to reduce unemployment are-
 Better fiscal policies so that overall unemployment is reduced as the overall
aggregate demand and rate of economic growth is improved. It will help in
improvement of the overall demand which in turn will help in the growth of the
GDP; this will help in creating better economic conditions for the overall
economy and its development (Butler, 2017).
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 Strong monetary policies that involves cutting down on the overall interest rate
and managing the overall money supply can help in reducing unemployment. It
will also help in controlling inflation which is a major cause of low demand rates.
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References
Butler, A. (2017). Contemporary South Africa (third ed.). UK: Plagrave.
Cornelissen, S. (2016). The Global Tourism System: Governance, Development and Lessons from South
Africa. New York: Routledge.
Elimam, H. (2017). The Role of Small Businesses (Small Scale Economic Projects) in Alleviating the Acuity
of Unemployment. International Business Research, 10(3).
Salahuddin, M., & Gow, J. (2016). The effects of Internet usage, financial development and trade
openness on economic growth in South Africa: A time series analysis. Telematics and
Informatics, 33(4), 1141-1154.
Sisk, T. (2017). Democratization in South Africa: The Elusive Social Contract. UK: Princeton University
Press.
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