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The SA Daily 20 August 2018

Only growth can deliver more jobs

  • At a recent ANC lekgotla, President Ramaphosa proposed a stimulus package to assist sluggish SA growth and employment. Not much is known yet about this plan, and the National Treasury said last week that several ‘budget-neutral’ funding measures are being considered.
  • Regarding the impact of real GDP growth on employment generation, we contemplate two real GDP growth paths; one of 1%, and one of 4%, and the likely impact on employment creation. An employment-GDP intensity (elasticity) of around 0.5 implies that a 1pps increase in real GDP growth is associated with a 0.5pps increase in employment. This, and using 2017 as a base year, implies an increase of R31bn in real GDP, translating into formal job increases of 50,866 p.a. Assuming real GDP growth of 4%  p.a. (or R125bn), formal employment could grow 2.1% (or 203,466 net formal jobs).
  • We await details of the proposed stimulus plan, as SA is faced with stubbornly high rates of unemployment, severe inequality, and poverty (see Employment and GDP of 16 August by Thanda Sithole).

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