The South African Labour Force (Grade 10 NSC Matric Economics): Revision Notes

The South African Labour Force

What is the economically active population?

The economically active population includes all people between the ages of 16 and 65 who are able to work. This group excludes learners, students, homemakers, and retired people. Importantly, unemployed people who are actively looking for work are still considered part of the economically active population because they want and are available for employment.

Age composition challenges

South Africa has a predominantly young population, but this demographic advantage is not being fully utilised for economic growth. The country faces significant challenges in harnessing the potential of its youth.

Of the 4.4 million unemployed people in South Africa, an overwhelming 71% (approximately 3.2 million) are 35 years old or younger. This represents a massive waste of human potential that could drive economic development.

Several factors prevent young South Africans from reaching their full economic potential. The HIV/AIDS pandemic has had a devastating impact on the working-age population, whilst low education levels limit opportunities for meaningful employment. Additionally, too few people are finding full employment, and entrepreneurship remains limited.

The root cause of these problems appears to be inadequate education and skills development. Whilst South Africa excels in some areas globally, the skills gap continues to hamper economic progress.

Labour force numbers and skills shortages

South Africa faces critical skills shortages in key professional areas that are essential for economic development. The country desperately needs more engineers, physicists, technicians, designers, information technology specialists, agricultural scientists, actuaries, financial market analysts, risk managers, and mathematics and science teachers.

These shortages have emerged because the educational system has failed to keep pace with changes in the South African economy. The structure of employment has shifted dramatically over recent decades.

Agriculture, which was once a major employer, was responsible for only 5% of employment by 2010. Meanwhile, other sectors requiring higher skill levels have grown considerably. The financial services sector exemplifies this transformation - in 1970, it provided only 3% of all jobs, but by 2010, it employed almost 13% of all workers.

Similarly, the wholesale and retail sector has expanded significantly, rising from 9% of employment in 1970 to 23% of employment in 2010.

Despite this need for workers, labour force participation remains disappointingly low. Only 54% of working-age people participate in the labour force, and of those who could work, 25% cannot find employment. In a total working-age population of 32 million people, only 13 million are actually working. Alarmingly, fewer people were employed in 2010 than in 2006, indicating a deteriorating employment situation.

Unemployment trends and causes

South Africa has experienced a sharp increase in unemployment since 1970. This troubling trend results from several interconnected factors that have fundamentally altered the country's economic landscape.

The decline of labour-intensive primary sector industries, particularly mining and agriculture, has eliminated many jobs that previously employed large numbers of workers. Simultaneously, the country has experienced significant population growth, creating more job seekers whilst available positions have decreased.

The lack of development in the informal sector has also contributed to unemployment. In many developing countries, the informal economy provides crucial employment opportunities, but South Africa's informal sector remains underdeveloped. Additionally, trade union demands have sometimes made it more expensive for businesses to hire workers, potentially discouraging job creation.

Employment characteristics

Whilst 13 million South Africans are working, the quality of employment remains a significant concern. Not all employed people have full-time, stable employment that provides adequate income.

Almost 5% of employed workers are underemployed, meaning they work fewer than 35 hours per week. Most of these underemployed workers are found in occupations requiring only unskilled or semi-skilled labour, limiting their earning potential and job security.

Entrepreneurs play a crucial role in job creation because they establish businesses that can employ additional workers. However, South Africa performs poorly in entrepreneurship compared to other countries.

The statistics are sobering: only one in every eighteen South African adults starts or manages their own business. Of the small businesses that do get established, between 70% and 80% eventually fail. This high failure rate prevents entrepreneurship from making a meaningful contribution to job creation and economic growth.

Geographic distribution of the labour force

Understanding where South Africa's population lives helps explain labour market dynamics and economic opportunities across different regions. The population distribution varies significantly across the country's nine provinces.

Gauteng has the largest population share at 22.4%, reflecting its position as the economic hub of the country. KwaZulu-Natal follows with 21.3% of the population, whilst the Eastern Cape accounts for 13.5%. Limpopo represents 10.9% of the population, and the Western Cape has 10.4%.

The remaining provinces have smaller population shares: Mpumalanga (7.2%), North West (6.4%), Free State (5.7%), and Northern Cape (2.2%). This uneven distribution means that job opportunities and labour market pressures vary considerably across different regions of the country.