Jobless or Job Creating Growth? Some Preliminary Thoughts

From a policy perspective, employment depends on both economic growth and the labour absorption capacity of the economy. Policy must target both of these. Higher growth rates can be achieved through productivity improvements (technology, industry restructuring, improved know-how, etc.) and/or growth in domestic or foreign market demand. Higher growth rates are difficult to achieve, and do not in themselves guarantee labour absorption as we have seen in recent years. This is partly because South African growth has been more reliant on intensive, rather than extensive growth. Moreover, in a distorted market, particularly in the context of the apartheid legacy, extracting more employment per unit of investment and output requires forceful stimulation and market reforms. This paper outlines the experience of employment and unemployment over the past 10 years. It explores thinking about whether SA is on a sustainable job-creating growth path. It reviews whether the trends would support a basic definition of jobless or job creating growth. But the definition of employment is very broad and so the paper then looks at some underlying trends in the quality of work: this helps us to understand whether the employment created contributes to a sustainable dynamic path. The paper concludes with some thoughts about policy implications and policy balance.