Jobs, inflation and growth — how do we make it work?

The Herald

09-05-2025

Celebrating more than 30 years of democracy with the marking of April 27, most South Africans would love to get a quick fix for the economy.
A magic wand to reduce unemployment, poverty and inequality in the post-apartheid SA we love could bring back some of the Madiba magic from 1994.
What about the relationship between inflation and unemployment?
Based on the Phillips curve, an inverse relationship between inflation and unemployment, in theory could reduce unemployment and increase wages.
This means that by keeping inflation low, government and monetary regulatory bodies are contributing to higher unemployment, according to the theoretical model.
Can it really be that simple — create more jobs by increasing inflation?
Could consumers, who breathed a sigh of relief over the VAT increase hiatus, afford higher inflation in the local SA economic climate?
SA's unemployment is structural, according to local economists who along with others have debunked the Phillips curve.
They argue the stubborn unemployment rate in SA makes it fairly unresponsive to monetary conditions.
Employment opportunities need to be created faster than the rate at which the labour force grows to reduce our unemployment rate, which remains persistent nationally at just over the 30% mark.
Can we create more jobs for unemployed graduates and matriculants in the country?
Where do we find jobs for our nephews and nieces, our sons and daughters, with the cost of brown bread that was R1.95 in 1995 and in 2025, has increased about tenfold to an average of R19.
While salaries may have kept up with these prices to some degree, did the job opportunities?
The simple question of supply and demand becomes important when answering this question.
While the youth are being educated through tertiary studies and internships, many remain unemployed.
This then begs the question if these tertiary institutions are matching the skills and output of their educational organisations to the needs in the Vuca (volatility, uncertainty, complexity and ambiguity) marketplace.
We live in the 21st century where big tech has disrupted the working world.
The skills required from a modern-day graduate are related to problem-solving, managing and making sense of big data and operating the various technologies which have increased efficiencies in manufacturing, but have cut labour significantly.
Let's consider two industries: newspapers and automakers, which are both relevant to our province and local economy.
Big printing presses have over the last couple of years been made redundant or reduced, which meant job losses for printing press operators and technicians.
News is consumed digitally and instantly, and therefore a new skill set is required of the newspaper editor and editorial staff.
The Herald is a good example of this, having transformed over the past 180 years to remain relevant to the local community.
OEMs (original equipment manufacturers) make big announcements of investments in the province and country; however, these investments do not always include huge employment figures.
This is because of advanced robotics and the efficiency associated with automation in the manufacturing sector; one simply needs to visit any local factory in East London, Gqeberha or Kariega to view these giant robots building parts and vehicles.
The skill set of an average blue collar worker is much more sophisticated and technical than ever before.
These investments into our local economy by OEMs — both locally and internationally — are crucial and critical for securing existing labour, but may not significantly increase job opportunities.
Therefore, we chip away at the block of unemployment much, much slower than before.
Consider the retirement age for public servants at 65. Does this not further stagnate the job creation prospects of the youth, making it harder for first-time entrants to get a foot in the door of the job market?
Perhaps the magic wand of fixing the economy is not as simple as we hoped, however, there are still decisive steps to take as a collaborative to make the Eastern Cape and SA economy stronger.
Our future labour force needs to be highly skilled, and tertiary institutions must be aligned to the needs of industry.
We should become innovative and not get left behind in the technology race, but lead as a province, country and continent.
As a province we certainly have pockets of excellence and need to diversify and multiply these opportunities for the generations to come.
Dr Luvuyo Bono qualified with a doctorate in labour law (LLD) at Nelson Mandela University in 2023, where he also holds the title of adjunct professor of law. He was admitted as an advocate of the high court in 2000 and has contributed to key labour law legislation in SA. He is the board chairperson of the Coega Development Corporation, and writes in his personal capacity.
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