Identifying employment-creating sectors in South Africa: the role of services industries

Figures & data

Figure 1: Meeting targets at different rates of employment growth

Figure 2: Formal employment by sector. Source: StatsSA (1997–2004). Note: there are two breaks in this Statistics SA series. The first lies between 1999 and 2000 with the shift over from the OHS to the LFS. The second lies between 2002 and 2003 as the 2003 and 2004 LFS is weighted to the 2001 census, while the figures for 2000–2002 are weighted to the 1996 census, based on revised population estimates. Statistics SA will release revised figures, but had not done so in time for publication.

Figure 3: Non-formal employment by sector. Source: StatsSA (1997–2004). Note: non-formal employment here includes the informal sector, domestic labour, private households and unpaid family labour. Subsistence agriculture is excluded as it distorts the picture unnecessarily. It is estimated to contain between 300 000 and 400 000 participants. As in Figure 3, note the breaks in the series in 2000 and in 2003.

Figure 4: The distribution of employment in the South African services sector, 2003. Source: Mayer (2005) , calculated from Quantec database.

Figure 5: Output and employment growth in the services sector, 1999–2003 (percentage annual growth) Source: Mayer (2005), calculated from Quantec database.

Figure 6: Tourism employment scenarios

Table 1: Expenditure and estimated employment arising from government spending on infrastructure and construction

	2002	2003	2004	2005	2006	2007	2008	2009
Government expenditure on infrastructure and construction
Total expenditure	62	74	73	72	76	76	76	76
Estimated 10% allocated to housing and public building maintenance	6	7	7	7	8	8	8	8
Infrastructure spending using traditional methods	55	67	62	58	58	55	51	48
Infrastructure spending using labour-intensive methods			3	6	10	14	17	20
Estimated employment
Total estimated employment	339 163	407 622	415 570	426 208	467 914	484 964	502 013	519 063
Estimated employment arising from housing spending	61 666	74 113	72 589	71 632	75 776	75 776	75 776	75 776
Estimated employment arising from public sector infrastructure still using capital-intensive methods	277 497	333 509	310 316	290 108	289 842	272 792	255 743	238 693
Estimated employment arising from public sector infrastructure using labour-intensive methods			32 665	64 469	102 297	136 396	170 495	204 594
Sources: Expenditure forecasts are sourced from Budget Review 2004/5, National Treasury (Government of South Africa, 2004a). They are presented in constant 2003 rand. This represents all known and planned spending in national, provincial and local spheres of government, plus public enterprises, extra-budgetary institutions and public–private partnerships.
Employment is estimated on the basis of coefficients provided by Sean Phillips, Deputy Director General, National Department of Public Works. The employment coefficients (jobs created per R1 million spending) used include: housing (10), capital-intensive infrastructure (5), labour-intensive infrastructure (10).
Housing and maintenance are separated as they are already labour intensive and it is unlikely that the number of jobs created per million rand spent could rise significantly.
It is assumed that the Department of Public Works stated target is met, whereby 30 per cent of all infrastructure spending is using labour-intensive methods by 2009 (Sean Phillips, personal communication, 5 August 2004).

Table 2: Services employment scenarios compared

Scenario 1	Scenario 2
• No extra funding for infrastructure (i.e. MTEF – Medium Term Expenditure Framework) remains; R4 billion per annum extra spent on social development programmes, using home care model	• No extra funding for infrastructure; R10 billion per annum extra spent on social development programmes, using centre-based model
• Tourism employment grows by 3% per annum	• Tourism grows by highest SATOUR projection, to 11 million visitors by 2011
• BPO does not attract substantial global business	• BPO does attract substantial global business and grows to 76 000 by 2008
• Non-formal sector grows by 2% per annum	• Interest rates and exchange rates fall, stimulating backward linkages from retail into manufacturing
	• Non-formal sector grows by 3% per annum
Impact – 2004–2014	Impact – 2004–2014
• Employment created = 2.24 million jobs	• Employment created = 3.45 million jobs
• Average 2% annual market-based employment growth	• Average 3.0% annual market-based employment growth
• Jobs still needed to meet unemployment target = 2.52 million	• Jobs still needed to meet unemployment target = 1.33 million
• Unemployment rate in 2014 = 26.4%	• Unemployment rate in 2014 = 20.1%

Figure 7: Sources of annual employment growth, scenario 1

Figure 8: Sources of annual employment growth, scenario 2

Figure 9: Employment scenarios compared

Mayer , M . 2005 . “ Trade in services ” . Pretoria Report prepared for the Director General's Employment and Economic Cluster, Government of South Africa

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Government of South Africa . 2004a . Budget Review 2004/5 , Pretoria : National Treasury .

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