Investigating chronic unemployment in South Africa, 2008-2015

Magister Commercii - MComThe South African economy is faced with a crisis of persistently high and rising unemployment rates. Although this is a cause for serious concern, the statistic captures a segment of the working-age population enduring recurrent spells of unemployment – a vulnerable group for consideration that these figures fail to uncover. The dilemma could be linked to the influx of previously disadvantaged groups (i.e. Africans and females) into the labour market since the dawn of democracy. Thus, the newly appointed South African government inherits an economy that had systematically disadvantaged most of the population, leading to an oversupply of labour, where highly-skilled labour appears to be more appealing in comparison to the relatively low-skilled labour offered by these persons. Historically suppressed groups thus disproportionately bear the brunt of this unemployment, where some may have involuntarily remained rooted in unemployment for longer periods of time than those considered unemployed on a temporal basis. The importance of exploring and understanding the roles of some underlying forces is extremely crucial to wrestle this pressing issue in a South African context, when examining labour market dynamics. This study therefore explores the nature and extent of chronic unemployment by examining the data of the first four available waves (2008, 2010/2011, 2012 and 2014/2015) of the National Income Dynamics Study (NIDS). The empirical findings reveal that those significantly more susceptible to chronic unemployment are: African individuals with either incomplete secondary education or at most a Matric qualification in tandem with an additional certificate/diploma, residing in traditional areas in less wealthy provinces (i.e. Free State and Mpumalanga). Furthermore, the results demonstrate that these chronically unemployed individuals are more likely to form part of the youth (25-44 years), be non-poor, with their household composition consisting of one to five household members where the minority enjoy wage employment whereas the majority endure spells of unemployment. Ultimately, they devote themselves to informal employment and occupations requiring semi-skilled and relatively unskilled labour in the community, social and personal services industry and on average earn R 3 342 per month in 2016 December prices