South Africa Must Rethink Work, Skills and Growth
The latest Quarterly Employment Statistics (QES) report for Q1:2025 landed not as a routine economic release, but as a sharp and painful reminder of South Africa’s persistent struggle with job creation.
Dr. Alex Malapane
A net loss of 74,000 jobs in just three months, followed by a year-on-year decline of 95,000 jobs, is more than a statistical dip, it is a reflection of structural weakness, a faltering national strategy, and a crisis of opportunity for millions of South Africans. These are not just workers losing jobs; they are families losing security, communities losing hope, and a country gradually losing its capacity to harness its demographic potential.
The decline cuts across key economic sectors: trade shed 52,000 jobs, community services lost 17,000, and even mining, once the cornerstone of our industrial growth retrenched another 4,000 workers. Meanwhile, gross earnings fell by R47.3 billion, a significant 4.6% drop from the previous quarter. Alarmingly, bonuses plummeted by 32.5%, reinforcing what the figures already suggest, not only are we employing fewer people, but those who are employed are earning less and becoming more vulnerable. Although manufacturing saw a modest increase of 2,000 jobs and the construction sector showed a slight uptick in full-time employment, these are blips in a broader downward trajectory.
What’s most concerning is that this downturn is happening despite a relatively stable macroeconomic environment and moderate inflation, which suggests the problem is less cyclical and more systemic. The reality is that South Africa is grappling with a deep structural misalignment between the skills our workforce possesses and the demands of an evolving economy. Our education and training institutions are producing graduates for jobs that no longer exist while high-potential sectors such as digital technology, green energy, and advanced manufacturing continue to face shortages in qualified labour. It is a paradox we can no longer afford to ignore.
South Africa’s youth unemployment rate, as measured in Q1:2025, remains stubbornly above 40%. This is one of the highest in the world. And it’s not just a statistic, it’s a ticking time bomb. A nation where nearly one in two young people is excluded from meaningful economic participation is one walking on a fragile edge. The disillusionment that follows unemployment is not just economic. It creates social erosion, fuels crime, political discontent, and weakens national cohesion. We cannot claim to be building a future-ready economy if the very generation that is meant to inherit it remains jobless and disengaged.
The country’s post-apartheid employment architecture was built on a foundation of equity, growth and transformation, but those ambitions have been repeatedly undermined by poor implementation, policy fragmentation, and weak institutional coordination. For instance, Sector Education and Training Authorities (SETAs), while well-intentioned, have largely failed to anticipate future labour market shifts. Their training output remains focused on static industries instead of rapidly emerging sectors like artificial intelligence, fintech, data science, and green energy. As a result, thousands of young South Africans are certified yet unemployable, qualified in paper but excluded in practice.
What is needed is a comprehensive recalibration of the skills pipeline. South Africa must adopt an anticipatory skills development model, one that uses big data, AI-driven labour market forecasting, and direct employer engagement to forecast demand five to ten years ahead. It is time to stop producing for yesterday’s economy. We need to embed practical training, work-integrated learning, and entrepreneurship development in every qualification. Every learner and or student in a public or private institution must spend a significant portion of their education in real-world environments, from construction sites to software development hubs. This dual model of education has worked for countries like Germany and Switzerland and can be localised for South Africa’s context.
Moreover, we must address the informal economy not as a nuisance, but as a frontier of opportunity. With more than 2.9 million South Africans employed informally, this sector contributes approximately 6.4% to GDP. Yet policy continues to overlook it. The state should formalise informal trade through micro-licensing, digitised payment platforms, and microcredit funding models. If every township entrepreneur was given access to structured business development support and simplified compliance, the ripple effect on employment would be exponential. We cannot solve our formal unemployment crisis without integrating informal sector potential into national planning.
The private sector, too, must step up. Corporate South Africa has the tools, resources, and platforms to drive meaningful employment, but commitment must move beyond glossy annual reports and selective CSI projects. We need binding employment compacts that measure the impact of business beyond profits, how many jobs have been created, what investment has been made in training, how inclusive is their workforce, and how deep are their local supplier linkages. Government should consider linking tax incentives to verified job creation and youth absorption. A company that increases its workforce by 3% annually, particularly through learnerships and internships, should be rewarded accordingly. If we want the private sector to carry more of the employment burden, we must make it easier, attractive, and strategic for them to do so.
Equally, the public sector must no longer be exempt from scrutiny. Despite being one of the largest employers in the economy, government departments and state-owned entities have outsourced far too much of their functions, failed to fill funded vacancies, and neglected skills development of internal staff. Public procurement, which is responsible for over R1 trillion in annual spending, should be leveraged for employment impact. Contracts should come with social conditions, for every major contract awarded, a minimum number of jobs or apprenticeships should be created. For example, infrastructure contracts should stipulate that at least 20% of the workforce be under the age of 35 and sourced from local communities. At the heart of all this must be a unified national mission: a Presidential Compact for Employment and Future Work. Such a pact must convene all stakeholders, government, business, labour, academia, and civil society, around a common vision and set of outcomes. We must shift from fragmented projects to systemic change. Employment should be the primary metric of success across government departments, not just economic growth, not just fiscal stability, but how many lives we’ve improved by putting people to work in dignified, sustainable ways.
