Bell, Trevor : Unemployment in South Africa

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In the case of Blacks, employment growth falls short of population growth in three years (1966 to 1968) in the period 1962 to 1974'). However. in the next nine years after 1974 total employment growth falls short of the Black population growth rate in no less than seven years, the only exceptions being 1980 and 1981 when in any case, as the figure shows, the excess of employment over population growth was very slight. In viev of this, it is not surprising that the overall unemployment rate does not decrease in absolute terms from 1979 to 1981 (except for the short-lived decrease in 19801, whereas the rate of registered unemployment amongst Asians, Coloureds and Whites did show a significant decline over these years. Thus the fact that the allraces and non-Black unemployment rates diverge during the boom of 1979-81 is quite understandable and does not cast doubt on the macro-estimates2'. Furthermore, it is clear from our discussion that the crux of the problem of unemployment in South Africa is a long decline in the employment growth rate, as a result primarily of a decline in the rate of growth of the demand for labour. Indeed, as Figure 3 shows, in the nine year period from 1975 to 1983 the employment growth rate was negative by a substantial amount in fobr years: 1977, 1978, 1982 and 1983, whereas previously (comparatively small) negative growth 1) It is probably for this reason then that the all races unemployment rate, which is dominated by Black unemployment, reaches its lowest level in 1967 and rises sharply in 1968, whereas the registered unemployment rate continues to fall right through to 1974. 2) Also relevant is the fact that the rate of growth of Black nonagricultural employment was actually less than the rate applying to all races together. Indeed, in 16 of the 23 years since 1960 the rate of growth of non-agricultural employment was greater for non-Blacks than for Blacks. Furthermore, since a much larger proportion of Blacks than of non-Blacks is in agriculture, in which employment growth is exceedingly slow, the overall rate of employment growth (including agriculture) is likely to be smaller for Blacks for this reason, apart from any other.
ates had been recorded only in 1956 and 1972. Alao, the employment growth peaks of 1980 and 1981 were clearly much lover than earlier peaks. Indeed, in terms of employment growth the upswing of 1979-81 was the weakest cyclical bmm since the upswing of 1956-1959. TO put these results in absolute terms, the four non-agricultural sectors with which we have been dealing provided Blacks with an extra 380 000 jobs between 1970 and 1982, that is, only some 32 000 per annum. Taking into account the rest of the non-agricultural sectors (trade, transport and communication, finance and insurance, and servicesl, it appears that total non-agricultural employment increased by 724 700 over this twelve year period, that ia, by about 60 000 per annum. Compared with this the Black labour supply increased by an estimated 1487000 between 1970 and 1982, that is, by about 125 000 per annum. What is absolutely clear from the evidence considered above is that there has been a very marked decline in the rate of growth of fo-1 sector, non-agricultural, employment, and we interpret thia as a marked decline in the demand for labour in these formal, nonagricultural sectors. Furthermore, we have suggested that the movements in the unemployment rate are consistent with the relationship between formal, non-agricultural employment growth and population growth rates illustrated in Figure 3. ii) 'Ihe long-term rising trend in the unemployment rate thus has to do with a fall in the rate of growth in the demand for labour, rather than with any shift in labour supply. But the question remains, what produced the slowdown in the demand for labour? There are various possibilities, but one very widespread and important view is that it is largely due to factor-market distortions which, by lowering the cost of using capital equipment relative to the cost of using labour, encourage the substitution of capital for labour, thereby reducing the demand for labour. Prominent amongst these distortions are overvalued exchange rates and low real interest rates, due to
Page 2 and 3: INSllIUTt TOR SOCIAL AND ECONOMIC R
Page 4 and 5: i CONTENTS Page - u.t of Tabla0 and
Page 6 and 7: Preface This paper is an extension
Page 8 and 9: Applications by whltea for Employme
Page 10 and 11: Simkins. His work is noteworthy par
Page 12 and 13: There is not, to my knowledge, anot
Page 14 and 15: The evidence thus suggests a persis
Page 16 and 17: ~i~~~~ 1: UNEMPLOYMENT PATES: UNITE
Page 18 and 19: Table 5: Unemployment Rates in Scnn
Page 20 and 21: Thue in a number of other countries
Page 22: Table 6 Registered Unemployment Rat
Page 25 and 26: Table 7 Non-Agricultural Employment
Page 30 and 31: governwant intervention in foreign
Page 32 and 33: Real Intwraat Rats and Rats of Incr
Page 34 and 35: Table 9 Real Interest Rates and Ave
Page 36 and 37: grawth in general rather than to an
Page 38 and 39: hetbr th. unemployment in voluntary
Page 40 and 41: it is argued that for a small open
Page 42 and 43: imzlO.ion of this form of voluntary
Page 44 and 45: significance1). However, the findin
Page 46 and 47: Thus where the unemployment rate sh
Page 48 and 49: have expected a substantial increas
Page 50 and 51: vii) Finally, amongst the causes of
Page 52 and 53: traditionally been considerably hig
Page 54 and 55: already become much more difficult
Page 56 and 57: unemployment is deregulated markets
Page 58 and 59: 'thirties and even the postvar peri
Page 60: might, JB (1982) "The Nature of Une

Bell, Trevor : Unemployment in South Africa

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