SA's expanding labour force caught between hope and a crumbling job market

Daily Maverick

18-05-2025

The labour force figures for Q1 of 2025 released by Statistics South Africa painted a grim picture of South Africa's labour market. As people continually enter the labour market, the stats show that the government and business need to start thinking innovatively to ensure there are enough jobs to go around.
This week, South Africans were once again confronted by the news that the nation's already dire unemployment rate had deepened when Stats SA released its Q1: 2025 Quarterly Labour Force Survey on Tuesday, 13 May. The official unemployment rate rose to 32.9%, a 1% increase from the previous quarter, and the expanded unemployment rate escalated to 43.1%.
On Tuesday, Daily Maverick reported on how South Africa was not only losing jobs, but large numbers of people are dropping out of the job market. While the working age population has grown by 130,000 from the last quarter, pushing the group to 41.7 million people, the labour force contracted, meaning 291,000 people lost their jobs.
These 291,000 people joined an already crowded group of South Africans who are living through joblessness. It is important to note that while the labour force stands at 41.7 million people, only 16.8 million people are in active employment. This means that about 25.1 million South Africans are vying for employment in a market that simply does not have enough jobs to accommodate everybody, and young people are disproportionately affected.
Youth locked out: The battle for a first job
One of the clearest indicators of how dire the battle for jobs is, is laid bare by the sheer number of applications the nation's different job placement programmes and initiatives receive.
The Youth Employment Service (YES) initiative is a public-private partnership focused on providing meaningful work experience for young people by partnering with businesses in the private sector. In an interview with Daily Maverick, YES CEO Ravi Naidoo revealed that since its inception, the programme has placed 187,200 young people in full-time 12-month work opportunities. However, 4.68 million young people have applied to YES over the years.
'That's between 25 to 30 applicants per placement,' said Naidoo. 'We'd give more opportunities if we had more sponsorship. But YES is 100% privately funded — we don't receive a single rand from government.'
At Harambee Youth Employment Accelerator, a similar pattern emerges. In the last Department of Basic Education Employment Initiative (DBE-EI) alone, over 13.8 million applications were received — from just 1.4 million unique youth applicants — competing for roughly 207,000 positions.
'That means a single candidate applied to an average of 290 schools, just for one potential placement. That kind of volume illustrates just how desperate young people are for a foot in the door,' explained Bongani Kgomongwe, Head of Data at Harambee.
Kgomongwe said that Harambee had experienced a similar trend in the other job placement and learnership opportunities it facilitated, not to the same scale as the DBE-E.
Despite the well-documented shortages in key sectors, such as teaching, nursing and early childhood development, the government has failed to align available human capital with existing needs. Kgomongwe highlights this disconnect:
'Yes, there seem to be positions available, but even if we close those skill gaps, we are still coming up short in terms of actual placement opportunities. Producing a million matriculants a year while offering a fraction of permanent jobs is not sustainable.'
He emphasises the urgency of rethinking qualification routes and leveraging non-traditional pathways like coding bootcamps and data training programmes that don't require three- or four-year degrees.
'We've learnt that traditional proxies like degrees are not always necessary. Programs that identify aptitude — and train youth in 6- to 18-month sprints — can fill gaps faster and better,' he said.
The depth of the crisis
As economic analyst Duma Gqubule starkly put it, 'We should never normalise this crisis. The world unemployment rate is 4.9%. More than 80 countries have achieved full employment. If others can do it, why can't we?'
Gqubule points to a mismatch between the growth of the labour force and sluggish economic expansion. Since 2008, the labour force has increased by 8.8 million people — but only two million jobs have been created, and just 1.2 million of those are in the formal sector.
'Our economy over the past 16 years has grown by just 1.1% annually. We need a GDP growth rate of at least 4% just to keep up with new labour market entrants. To reduce unemployment, we need 6% growth or more.'
Gqubule argued that no single institution was directly responsible for job creation, yet the government needed to be more proactive in its approach to job creation. 'The Treasury is focused on creating budget surpluses, and the Reserve Bank on inflation. If the two most important institutions in the economy don't care about jobs, who will create them?' he asked.
What will drive job creation?
Three pillars must underpin any national job creation strategy, according to Gqubule:
Massive economic growth
The economy must grow faster and differently. Growth must be labour-intensive, targeting sectors such as manufacturing, infrastructure and agriculture.
'We need industrial policies that increase the employment multiplier — the number of jobs created per percentage point of GDP growth. Our current structure doesn't absorb the skills of the people we actually have.'
Expanded public employment programmes
The government must drastically scale up initiatives like the Expanded Public Works Programme (EPWP) and the Presidential Employment Stimulus.
'We need a new institution — a quasi-public agency — that funds and monitors these programmes. The goal should be to create five million work opportunities, not just the 1.8 million we have now.'
Gqubule recommends funding this by abolishing the ineffective Employment Tax Incentive, which he calls a 'basic income grant for employers,' and redirecting funds from the R137-billion surplus in the Unemployment Insurance Fund to fund the new dedicated national jobs agency to ensure SA's public employment programmes are well funded and sustainable.
YES as a scalable model for impact
According to Naidoo, YES is twice as large as all 21 Sector Education and Training Authorities (Setas) combined in terms of completed full-year placements, despite being entirely funded by the private sector.
He said that even though YES was not funded by the taxpayer, the initiative delivered more than the Setas and internships funded by the government. 'We've had over 1,800 companies fund youth placements. The only constraint is sponsorship,' said Naidoo.
Naidoo said that in 2023 alone, 7,300 YES alumni started their own businesses, making it the largest pipeline of young entrepreneurs in the country.
'They're not just workers — they're becoming future employers,' Naidoo said. 'The idea is to make youth the solution to youth unemployment.'
What must change?
Both Gqubule and Naidoo agree that economic growth alone isn't enough. Growth must be labour-intensive, and it must come with deliberate pathways from education to employment.
'You can't study plumbing and never touch a pipe,' Naidoo noted. 'We need real work experience linked to vocational training. Otherwise, we waste the billions already being spent on education and skills.'
Gqubule adds: 'We need massive investment in public employment programmes and infrastructure, which has the highest job multiplier in the economy. Government needs to stop cutting these budgets and start treating them as the economic engine they are.'
Concrete recommendations include:
Creating a central public-private agency to expand and monitor job creation programmes.
Abolishing the ineffective employment tax incentive.
Redirecting surplus funds like the R137-billion in the Unemployment Insurance Fund toward real job creation.
Rethinking rigid qualification requirements for high-demand industries.
Naidoo, meanwhile, emphasised the need for ecosystem alignment between the private sector, government training programmes and demand-side job placement.
'We don't want government's money, but we do want their training to connect with our opportunities. There's no point spending billions on TVETs if those graduates aren't getting jobs.'
He warned that unless this alignment improved, even good government spending would be ineffective.
'We already spend R500-billion a year on education and training, more per capita than most countries in the world. But up to 50% of that is wasted, because it doesn't lead to employment.' DM