Recession Worsens South Africa's Chronic Unemployment

By Karin Brulliard
Washington Post Foreign Service
Thursday, July 16, 2009

KGOTSONG, South Africa -- The economic crisis is causing South Africa, like many countries, to hemorrhage jobs. But its far deeper unemployment problem is represented not by pink slips but by the many people in this dusty rural township who do not work and never have.

One recent weekday, Fikile Present, 25, was doing little more than hanging out inside the shack he shares with his mother, because he had no job to go to. Neither did the neighbor sweeping her dirt yard, the guy biking through town, the women waiting for work on the corner and the ragged crew sifting through garbage at the dump.

Places like Kgotsong exist all over South Africa, where it often seems joblessness, now at more than 23 percent, is a way of life. The nation that is Africa's economic engine has long had one of the world's highest rates of unemployment, an intractable legacy of apartheid that economists deem the root of South Africa's stubborn poverty and inequality. It is also a prime illustration of the failure of democratic governments to extend economic freedom to a black majority that won liberation 15 years ago but remains South Africa's most out-of-work group.

"I dreamed about myself being a technician or working in an engineering office," said Present, adding that he regularly seeks work. "That is all in the past. Now what I'm looking for is a job. Any job."

There is little consensus on a solution. But experts agree that joblessness is costly to South Africa, which helps support nearly one-quarter of the population with the developing world's biggest welfare program. Some warn that chronic unemployment is a tinderbox for instability of the sort that flared last year, when poor South Africans unleashed a wave of violence against foreigners they accused of taking their jobs.

"Worst of all, unemployment is a terrible waste of human potential," said Ann Bernstein, executive director of the Center for Development and Enterprise in Johannesburg. "Almost every unemployed person could and should be doing productive work that would improve their lives and develop the country."

President Jacob Zuma, a populist elected a few months ago on promises of spreading wealth, has pledged to create half a million jobs this year and 3.5 million more by 2014. But the promised jobs are temporary public works positions that might not lead to true employment gains. And with South Africa now in recession after years of steady growth, economists say the government will have a hard enough time saving jobs, much less creating them.

The Shadow of Apartheid

In Kgotsong, an arid grid of shacks and low-slung houses in South Africa's corn belt, the promises inspire scant hope. According to the most recent data, more than 41 percent of people here are unemployed. Present said most people he knows survive on state grants. He is among them: With no skills to market, he is largely supported by his mother's monthly $120 old-age grant.

Present is just one job-seeker in a pool that is massive by almost any standard. Across impoverished sub-Saharan Africa, the unemployment rate is about 8 percent, according to a recent International Labor Organization report, though a majority of the employed have informal jobs and make less than $2 a day. In middle-income countries more comparable with South Africa, such as Chile and Malaysia, the rate is typically less than half of South Africa's.

But economists warn that it is unwise to compare South Africa's labor market with others because its problem is rooted in a history unlike any other nation's.

Under apartheid, a white supremacist government isolated blacks in crowded townships and desolate rural areas with weak transportation links to urban areas and schools designed to keep them under-educated. Blacks' opportunities to start businesses were limited, stunting the entrepreneurial knowledge that fuels informal economies in many other developing nations.

"Employment is about one thing leading to another. And that's a historical process," said Miriam Altman, executive director of the Center of Poverty, Employment and Growth at the Human Sciences Research Council in Pretoria. "Here in South Africa, they specifically excluded the majority of the population -- from employment and from living in the right places."

When apartheid ended in 1994, a glut of unskilled black workers entered the labor market. But once-powerful agriculture and mining industries, which provided most of the jobs in places such as Kgotsong, have shrunk and become mechanized, shifting the economy toward one favoring skilled workers.

Many apartheid-era problems remain. The townships where many blacks live still have poor transportation and abysmal schools that do not prepare students for the job market: As of 2007, the high school pass rate for blacks, who make up 80 percent of the population, was slightly more than half that for the 10 percent who are white.

"Learners are being promoted out of the school system, and the situation is just doom in front of them," said Mlungisi Nyamane, a former high school principal in Kgotsong who described schools there as "terrible." He recently began advising jobless residents on launching businesses -- something he said they "never dreamed" of during apartheid -- but most have no money, speak little English and know nothing about writing business plans.

A Need for Low-Skill Jobs

From the perspective of those in Kgotsong, joblessness is a complex equation of penury and connections both geographical and political.

Day jobs can be found at the industrial zone in the nearby town, Present said, but usually there are many more seekers than work, and the three-mile minibus trip costs 70 cents. He gets occasional construction gigs, but employers want a certificate of expertise. There is farm work, but it pays $5 a day, lunch eats some of that pay and extreme conditions spur sickness, he said, concluding that "it's better to do nothing."

On a recent morning, Present and two jobless friends walked under a blazing sun toward the computer lab at the tiny library to check on résumés they had posted to a Web site called Jobmail. Outside, they ran into Master Medupe, smiling on his bicycle.

"I'm 37. I've never had a permanent job," Medupe said by way of introduction. He said he was volunteering for a politician he hoped would reward him with work. "To survive, you have to meet the relevant people."

Inside, under dangling posters of Garfield the cat, young men paged through newspapers advertising work for tailors and drivers with experience. The three computers were not working, as is often the case.

How to create large numbers of low-skill jobs is the subject of vigorous debate, in part because there has been little assessment of the many job-creation programs the government has launched over the years.

Some researchers suggest attracting investors with special economic zones or boosting vocational education. Many say South Africa crucially needs to loosen labor regulations that make hiring and firing difficult and keep wages for unskilled workers significantly higher than in comparable economies.

"At this point, the urgency is for creating jobs at the skill level you have," said Sandeep Mahajan, the World Bank's lead economist here. "Given the low levels, it comes back to manufacturing, perhaps the informal sector and agriculture. . . . That's the dilemma this government faces."

But liberalized labor laws are anathema to the powerful unions that support the ruling African National Congress and helped propel Zuma to power. In recent weeks, the unions have been pressuring the Reserve Bank to lower interest rates to invigorate the business climate and generate jobs.

There was hope in Kgotsong for mass employment two years ago, as plans developed for a corn-based biofuels plant that was expected to create 10,000 jobs. Government officials halted the project over concerns about food security.

On a recent afternoon inside a bar, Momgezi Sebotho lamented the turn of events.

"I say to the people, let's go to the mountain. . . . The mountain will never come to you," said Sebotho, 42, who works at a nearby water plant. "Let's help the government to be able to create jobs."

How? "It's difficult," he said, shaking his head.