Solving Unemployment: Causes and Effective Solutions
Unemployment is defined as “a situation where someone of working age is not able to get a job but would like to be in full-time employment”. The unemployment rate in South Africa is remarkably high, it is one of the highest in the world. In 1998 unemployment was officially measured at 39% on the broad definition and 26% on the narrow definition. It has been more than two decades since the first democratic elections; however, unemployment levels remain high and are a major concern. Unemployment is a national crisis that feeds two of the country's other big socio-economic challenges: poverty and inequality. In this essay about unemployment there will be an attempt to reveal this topic.
Unemployment is mostly understood by people as “those who do not have a job”. StatsSA defines an unemployed person as a person who is actively seeking employment. Adam Haves defines unemployment as a term referring to individuals who are employable and actively seeking a job but are unable to find a job. When demand, consumption, and buying power reduces, it results in lower profits for businesses. Unemployment creates an ongoing cycle that is difficult to reverse without some sort of involvement.
Unemployment levels in South Africa are extremely high which is erratic and problematic and potentially a matter of serious concern. A major increase in the unemployment rate took place in 2020 as the whole world faced a global pandemic. Due to the coronavirus outbreak, many people could not afford to keep the same number of employees as it was difficult to pay full wages and salaries. Business dropped due to the virus outbreak resulting in tons of people losing their job thus resulting in poverty, an increase in crime, and many more socio-economic problems. An increase in population leads to higher unemployment rates as the number of people who are looking for jobs is increasing; it is more difficult to arrange jobs for all workers. if people are not educated enough or do not have the appropriate skills and knowledge that the job requires, a certain position will not be filled thus resulting in unemployment as he/she does not have what jobs require. Many people have lost their jobs due to convenient machines and new technology that do the job much faster and is more cost-efficient. For example: before the internet, many people worked as travel agents but now that we have the internet, we can do this by ourselves without the need of a travel agent.
Economic growth is known as the ultimate goal of an economy. It is to produce more goods and services over time, in other words, increase GDP. Economic growth is a significant method for reducing unemployment and other socio-economic issues. It helps to help improve the living standards of people. A rise in the growth rates of GDP is expected to increase employment levels thus reducing unemployment. Okun’s law states that a country’s GDP should grow at about 4% for one year to achieve a 1% reduction in the rate of unemployment. When unemployment increases it leads to people not having enough money to spend which then leads to a decrease in profits for businesses and an increase in job losses. It is of utmost importance to reduce the unemployment rate.
Maximilian Matschke alluded that unemployment is a ticking time bomb in South Africa. Without work they have no income; without the income, they have no chance to build a future and thus resulting in to increase in crime and poverty. For us to reduce unemployment we need to help small and medium-sized enterprises to grow. We need to educate and turn young people into entrepreneurs.
A decrease in unemployment rates will reduce government borrowing and help economic growth. If the unemployed get jobs, they will increase spending, and this will cause a positive multiplier effect which helps to increase economic growth. It is therefore recommended that young people are educated and sent for necessary training. Entrepreneurs should motivate others to become entrepreneurs as this will create more job opportunities.
- GroundUp. (2019). Why is South Africa’s unemployment rate so high?
- Kingdom Ghandi, G. Knight, J. (2001). Unemployment in South Africa: the nature of the beast. Department of Economics. University of Oxford.