South Africa is facing an increasing likelihood of social unrest in 2024 due to persistently high unemployment and inequality.
The South African Human Rights Commission (SAHRC) released its report on the 2021 July Riots this week, outlining the reasons for the widespread social unrest and the government’s failure to prevent or stop it.
The riots and destruction that took place in July 2021 saw widespread looting, violence, destruction of property and the disruption of economic activity in KZN and Gauteng.
During this period, 354 people lost their lives, and over 5,500 people were arrested. It was also reported that an estimated 40,000 businesses and 50,000 informal traders were affected, with 150,000 jobs at risk.
The financial damage of the unrest was estimated at R50 billion.
The report said that organised groups and individuals opportunistically used this period as an attempt to upend the rule of law by looting goods and committing acts of violence.
In its report, the SAHRC fingered high and rising unemployment as one of the underlying reasons for the unrest.
“The socio-economic challenges in South Africa, such as high unemployment rates, poverty, and spatial inequality, provided fertile ground for the unrest to escalate,” it said.
Minister of Trade, Industry and Competition Ebrahim Patel told the SAHRC, “While it was true that there were those with a different agenda who lit the match, that match was thrown on dry tinder in communities where there were severe unemployment and poverty.”
He added that the reality of the frustration caused by unemployment and poverty was clear to see.
President Cyril Ramaphosa added that “socio-economic challenges, such as unemployment and economic inequality, pose threats to national security”.
Testimonies from businesses indicated that the unrest represented public dissatisfaction with issues like high unemployment, poverty, inequality, unaccountable governance, and intra-party tensions.
These warnings echo those of the United Nations Development Programme (UNDP).
It warned that South Africa’s high unemployment rate, particularly among its youth, is a “ticking time bomb” that could result in social unrest.
“Youth unemployment in South Africa is a multipronged challenge that limits the earning potential of youth, stymies business growth, threatens social cohesion, and puts pressure on public resources,” the report said.
“There is no doubt that the high unemployment rate is a ticking time bomb.”
Financial advisory firm PwC pointed out that unemployment is on an upward trend due to structural constraints that limit growth, particularly load-shedding and deterioration of logistical infrastructure.
These constraints limit potential economic growth in the country, and given the relationship between economic growth and employment, unemployment will rise.
The accounting firm’s baseline growth rate for South Africa is 1.3% per annum over the long term.
This is barely above South Africa’s population growth rate of 1% per annum, meaning incomes will remain stagnant in the long term.
With high inflation, South Africans will be getting poorer in real terms.
Due to South Africa’s poor economic growth, PwC anticipates the country’s unemployment rate increasing from 32.7% at the end of 2022 to 35.5% in 2030.
This is the baseline scenario. The downside scenario has the economy growing at a mere 0.9% per annum for the next decade. In this case, unemployment will rise to 37.2% in 2030.
Even in the upside scenario, PwC sees unemployment rising to above 34% at the end of the decade.
If South Africa fails to address unemployment, it will face growing social unrest, PwC warned.