DUMA GQUBULE: Job creation in Western Cape is nothing to brag about

Whenever the DA decides to politicise unemployment statistics, many South Africans wait to see what the “people’s economist” will say before taking a view. After DA leader John Steenhuisen said during a recent speech that the Western Cape government had created 300,000 jobs in 2023 — more than any other province — it was easy to respond that this was fake news.

According to Stats SA’s quarterly labour force survey for the fourth quarter of 2023, the Western Cape created 161,000 jobs during the year. KwaZulu-Natal (315,000) and Limpopo (181,000) created more jobs. But it is wrong for any politician to claim credit for the 2.2-million jobs “created” during the last two years, since the labour market was just bouncing back to the situation before the Covid-19 pandemic.

The DA likes to say that the Western Cape has the country’s lowest unemployment rate. But the province has had SA’s lowest unemployment rate since long before the DA took over the province in 2009. According to the 1996 census, the Western Cape had an expanded unemployment rate of 17.9%, far lower than any other province. Therefore, the starting point was far lower than the national average of 33.9%. The province’s former premier, Ebrahim Rasool, once told me: “The Western Cape inherited this man-made advantage from the apartheid era.”

He attributed this to the fact that the province had the country’s most stringent influx control policies to maintain a coloured labour preference policy. This limited the African population to 21.6% of the province’s total, according to the 1996 census. The African share of the population increased to 38.8% in 2022, which probably partly explains the subsequent increase in the province’s unemployment rate to 25.6% during the fourth quarter of 2023.

If we look at unemployment in the Western Cape over the past two decades, the province actually did better under the ANC than under the DA’s leadership. From the first quarter of 2003 to the fourth quarter of 2008 — mostly under ANC governance — the provincial unemployment rate fell to 19.1% from 27%. From the fourth quarter of 2008 to the fourth quarter of 2023, mostly under the DA, the unemployment rate increased to 25.6% from 19.1%. If we delve deeper, the province created 425,000 jobs during the first six-year period, more than the 305,000 increase in the labour force. The number of unemployed people declined to 490,000 from 610,000.

The province created 685,000 jobs during the second 15-year period, much lower than the growth of the labour force of 1.1-million. The number of unemployed people increased to 951,000 from 490,000. This was the highest number of jobs created by any province. But the majority of the jobs were created in finance and community and social services (mostly government). Since this is in line with trends at the national level and almost every other province, it is nothing to brag about.

If we measure this growth as a percentage of employment during the fourth quarter of 2008, Limpopo had the country’s fastest rate of growth. It created 583,000 jobs, an increase of 63.7% compared with the increase of 33.1% in the Western Cape. But SA is creating too few jobs, even in the Western Cape and Limpopo, to absorb the annual flood of new entrants into the labour market, let alone the millions who are already unemployed.

Also, the Western Cape’s GDP growth mostly tracks the national average. Since there is a relationship between GDP growth and job creation, the province reduced unemployment under ANC rule because the national economy grew by 4.5% a year. There has been a subsequent GDP growth collapse to 1.2% a year during the second period, under DA governance, which has impeded job creation.

The truth that politicians will not tell you is that a province does not really have the macroeconomic policy tools to increase GDP growth and create jobs.

• Gqubule is research associate at the Social Policy Initiative.