Private sector the solution to unemployment crisis

The private sector is the solution to South Africa’s high unemployment level as it employs most South Africans, and the government’s role is to create an environment conducive to private-sector growth and employment. 

This is the view of South Africa’s Finance Minister, Enoch Godongwana, who spoke at News24’s On The Record Summit last week. 

South Africa’s unemployment rate has improved slightly in 2023 to 32.6% at the end of the second quarter. 

However, the number is still shockingly high, with 7.9 million South Africans unemployed and 13.3 million economically inactive. 

According to the expanded definition, the unemployment rate is 42.1%. 

The country’s youth are particularly hard hit. Of the 10 million people between the ages of 15 and 24, only 2.5 million are in the labour force.

Godongwana said the solution to this problem can only be found in the private sector – not the government. 

“I went to one province, and I found people counting how many people each department is going to deploy. That is their concept of job creation. My sense is that the majority of people that are employed in South Africa are employed by the private sector.”

Godongwana said the government’s role is to create a conducive environment for the private sector to create jobs. 

The minister echoed comments from President Ramaphosa’s 2022 State of the Nation Address (SONA), where he emphasised the role of the private sector in job creation. 

“We all know that government does not create jobs. Business creates jobs. About 80% of all the people employed in South Africa are employed in the private sector,” Ramaphosa said. 

“The key task of government is to create the conditions that will enable the private sector – both big and small – to emerge, to grow, to access new markets, to create new products, and to hire more employees,” he said.

However, Ramaphosa also said the state has a clear role in job creation – through state-owned enterprises, public employment programmes, and industrial policy. 

The reality in South Africa is that the private sector created the most jobs. 

“The private sector employs some three-quarters of South Africa’s workers and accounts for over two-thirds of investment and research and development expenditure,” said Ramaphosa.

For example, the number of people employed in the public sector increased from 1.9 million in 2002 to 2.8 million in 2017. Over the same period, the number of people employed in the private sector increased from 8.2 million to 13 million.