A blog series to provoke a constructive conversation about policy reform.

By Alan Hirsch and Brian Levy.

South Africa is living through its worst unemployment crisis on record. On the narrow definition, 8.5 million people are out of work. Add the discouraged unemployed and the number climbs past 12 million.[1] Average incomes, meanwhile, have been falling since 2014.[2] Close to 40% of South Africans are very poor, and close to 20% are extremely poor[3], and because poverty tracks unemployment so closely, job creation is the core developmental challenge we face.[4]

There is a further group that we shouldn’t overlook: people who are not in ‘good jobs’, but are not counted among the very poor either. They get by on precarious work – domestic, agricultural, construction – much of it informal. The gap in income and living standards between this precarious middle segment and the formally employed is stark; we have previously called it ‘a cliff’.[5] Put it all together, and two-thirds of South Africans are poor, very poor, or extremely poor.[6]

Why? At root, because growth has been too weak. The evidence shows that when the economy grows, employment does respond.[7] But growth on its own, without deliberate support for job creation, will not be enough to turn the crisis around. We will set out the calculations behind that claim in more detail later in the series.

Government’s structural reforms have not yet delivered much. And even once they start to take effect, will that be enough to defuse the social pressures that, this year, helped fuel a wave of anti-foreigner sentiment? We do not think so. Structural reform is necessary, but it will not be sufficient on its own – which leaves some hard questions:

How do we get South Africa growing again? Where should investment be directed? Where will the jobs come from?

Beyond growth, what reforms could support further job creation and raise incomes for the poor?

Which reforms are politically viable and socially beneficial, and how should we prioritise them?

How do we build the hope and confidence, across society, that a development strategy needs in order to succeed?

These are the questions this series will try to answer. We do not claim to have it all figured out, and you may well disagree with some of our answers – that is fine. What we are hoping for is a constructive conversation about how to build shared prosperity in South Africa.

Notes
[1] Statistics South Africa, Quarterly Labour Force Survey, Q2 2026 (P0211)
[2] World Bank, GDP per capita (constant 2015 US$), South Africa
[3] Statistics South Africa, poverty statistics
[4] Development Southern Africa journal, on poverty and unemployment
[5] ESID Working Paper 51, on the formal-informal income gap
[6] Statistics South Africa, Report 03-10-06 (2023)
[7] ERSA Working Paper 631, on employment and growth