ADRS Global News


By Dr Asghar Adelzadeh (

Published 18th March 2018


Jobs Needed

In his first SONA, President Ramaphosa promised “to convene a Jobs Summit … to align the efforts of every sector and every stakeholder behind the imperative of job creation.” This promise echoes previous government commitments to reduce the unemployment rate to 6% by 2030, while acknowledging the economy’s dismal job creation performance over the last 20 years. According to Stats SA, the unemployment rate has actually worsened from 22.5% in 2008 to 27.5 percent in 2017, despite government policy aimed at fighting the high rate of unemployment during the same period.

Since full employment is a primary macroeconomic objective, it is appropriate for the upcoming Job Summit to consider two critical questions: Firstly, why has the economic policy framework of the last 20 years been so ineffective in reducing the unemployment rate, and actually produced the opposite outcome? Secondly, if economic policy continues on its current course, what will the likely unemployment rate be over the next 12 years, until 2030?

To examine the second question and forecast the impact of economic policy on the unemployment rate, we use the ADRS Macroeconometric Model of South Africa (MEMSA™). A similar approach can be used to produce foresight of alternative policy scenarios. The scenario is defined by MEMSA’s default values for exogenous variables for the period 2017-2030. The future values of these inputs, that include domestic policy and foreign factors, are chosen to reflect smooth extensions of their most recent values. Therefore, the model’s simulation based on a status quo scenario represents a quantitative outlook of the future of the South African economy that can best be described as the extension of its recent policies and performance.

The simulation results of the status quo scenario highlight the significant gap between the likely future performance of the economy and the government employment target for 2030. It shows that if future economic policy closely follows that of the past, there will be some progress, but it will significantly under-deliver by 2030. The unemployment rate in 2030 will still be more than three times higher than the NDP target of 6% for 2030. Therefore, the forecasts highlight major limitations of current macroeconomic policy to annually create the level of employment required to achieve the goal of a 6% unemployment rate by 2030.

Clearly, the upcoming Job Summit provides the opportunity to (a) look back and critically examine why macroeconomic policy has failed to reduce unemployment, (b) look forward to assess the extent to which current macroeconomic policy is unlikely to meet the employment goal set for 2030, and (c) propose changes to the current economic policy framework that are likely to produce much better employment outcomes.

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