Employment impact of national, provincial and local government capital in South Africa: An aggregate and sectoral perspective

Abstract

This study examines the impact of general/national, provincial and local government capital on employment in South Africa. The study spans from 1993 to 2017 for a panel of 269 South African municipalities. The study employs the Granger causality test and the System Generalised Method of Moments (SGMM) estimation techniques. Findings show bidirectional causality between the variables of interest in the eight economic sectors. The results from the SGMM show that general/national government capital contributes more to total employment and the categories of employment (that is, different skills levels) in the economic sectors compared to provincial and local government capital. This suggests provincial and local government capital has not adequately contributed to citizens’ different skills development and employment levels. Therefore, this article recommends synergised and well invested national, provincial and local government capital at all levels of skills development to equip citizens, create jobs, and grow the South African economy.

Keywords:

• Government capital
• employment
• system-GMM
• South Africa

PUBLIC INTEREST STATEMENT

The South African economy is today plagued with unemployment crisis that has deepened the problem of poverty and inequality. Therefore, in order to rescue the escalating joblessness in the country, there is need to assess the impact of general/national, provincial and local government capital on job creation for the purpose of policy recommendations. The results reveal that the national government contribute more to total employment and different categories of employment (that is, skilled, semi-skilled and low-skilled) when compared to provincial and local government. This suggest that there is need to shift attention from the national government to provincial and local government to contribute to citizens’ different skills development and employment levels in order to complement the effort of the national government.

Acknowledgements

The author(s) would like to thank the editor(s) and anonymous reviewer(s) for their valuable comments. The usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The authors received no direct funding for this research.

Notes on contributors

Charles Shaaba Saba

SABA CHARLES SHAABA received his PhD in Economics from University of Johannesburg, South Africa.; Currently a research fellow at School of Economics University of Johannesburg. Current research interest: Poverty and Inequality; Defense and Peace Economics; Public Finance; Development Economics and Transport Economics.