The following explanation for South Africa's persistently high unemployment was posted on Reddit/AskSocialScience substack by a University of Cape Town MPhil PPE student. It's one of the more cogent I've encountered and unlike the trite reasons offered by government, media and mainstream analysts:
This is a bit of a simplification, but essentially, the problem boils down to one of labour absorption: the private sector in SA is too small to employ the entire South African labour force.
The reason for this can be traced back to the early development of the South African economy, specifically during the colonial and subsequent Apartheid era.
Early industry in SA (here meaning mining) was developed around the exploitation of African labour, which was used as a readily available source of cheap labour to man a labour-intensive industry. Subsequent government policy largely backed this approach, setting up institutions like the homelands system as a means to provide a ready source of cheap self-sustaining single male labour. It yielded significant dividends, with SA developing not only the largest, but also the most sophisticated economy in Africa; much of it due to the surplus value of the exploited labour (1).
The problem with this is that while output may be optimised, the wage gains from that output is not channelled back to the labour force [ed: I think the writer means low wages]. This has the adverse effects of creating suppressed domestic demand, as only a small group can actually afford what is being produced and sold on the domestic market. This isn’t a problem for commodities (and the mines producing them), which can be exported. However, for manufacturing (which is, especially in the nascent stage of development, dependant on a protected domestic market) this is a severe problem. Many early South African industrialists recognised this problem, however, maintaining the racial hierarchy underpinning the South African nation was given priority by the government (2).
As a result, while the private sector in South Africa did have a significant size and depth (beyond that of most post-colonial nations), this scope was always smaller than what market laws dictated it should be. It was predicated on the market demand of a minority of the population (the white minority); with the majority, despite their labour participation, not having the necessary disposable income to be market participants. This was a problem carried over in 1994, and in many ways intensified: the open market policy of the ANC killed many of the older industries which had previously relied on protected domestic markets (3). At the same time, the South African economy experienced significant growth in the post-1994 era, largely because of those policies.
The problem is that this growth is rarely in labour-intensive areas, with much of it occurring in tertiary concentrated industries (telecoms, retail and insurance industries) (4). Meanwhile, the exploitative labour conditions many people experienced in the past have in many ways persisted: the wage rates in the mining and agricultural sectors are still very low, and even now SA still lacks comprehensive minimum wage legislation. This in turn means that the underlying problem with the South African economy has never gone away: the private sector is unable and unwilling to employ everyone. Domestic demand is still depressed, and what demand we have is predicated on exorbitant debt needed to buoy our employment rate (5).
South African goods and services which can compete on the international market don’t need the unskilled labour which the majority can provide, which only exacerbates the problem. It’s a pretty persistent problem, which probably won’t go away soon.
Sources:
1: Mahmoud Mamdani, Citizen and the Subject (Princeton University press, 1996): 62-108.
2: Charles Feinstein, H. An economic history of South Africa: conquest, discrimination and development. (Cambridge University Press, 2005). 90-112.
3: Richard Mshomba, E. Routledge handbook of African Politics. (New York: Routledge, 2013): 362-372
4: Stan du Plessis. Economic Growth in South Africa since 1994. (https://www.researchgate.net/publication/24134153_Economic_Growth_in_South_Africa_since_1994)
5: https://businesstech.co.za/news/banking/259487/economist-points-to-scary-sa-government-debt-to-gdp-ratio/
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