South Africa has high rates of inequality, much of which can be seen geographically. To reduce spatial disparities, we need nuanced policies and interventions that consider the unique needs and challenges of different regions. HSRC researchers recently mapped labour absorption patterns across South Africa to see how these link to spatial development and to understand some of the causes of the regional variation. The researchers suggest practical strategies for policymakers and stakeholders to consider. By Jessie-Lee Smith
In the first quarter of 2024, Statistics South Africa (Stats SA) revealed that the official unemployment rate in the country rose from 32.1% in the last quarter of 2023 to 32.9% in the first quarter of 2024. Income inequality in South Africa is also high, with some statistics asserting that it has remained among the highest documented globally. Economic data illustrates these inequalities spatially, highlighting disparities across different regions. This can be seen in variations in income levels, employment rates, access to education, and health outcomes.
A recent HSRC study showed that unemployment and labour absorption differ spatially, like inequality. In this study, HSRC researchers Dr Gina Weir-Smith and Dr Simangele Dlamini used labour absorption rates from 24 years (1996–2020) of Global Insight data to illustrate spatial characteristics of the South African labour market. Labour absorption was used as the metric to identify disparities because it reflects the ability of an economy to create employment. The researchers adapted the following map (Figure 1) to reveal the nationwide labour absorption rate continuum.
Figure 1. Labour absorption rates per municipality
Source: Created by the authors using IHS Global Insight data
From their analyses, Weir-Smith and Dlamini illustrated that economic activity in one area can boost labour absorption rates and economic activities in neighbouring areas. This phenomenon is known as regional spillover, which happens when the positive economic effects in one region flow into neighbouring areas. Similarly, areas along significant roads connecting economic hubs, known as development corridors, showed clear patterns of increased labour absorption.
The researchers showed that the more urbanised an area was, the higher its labour absorption rate. Similarly, higher functional literacy rates were also associated with higher labour absorption rates. The spatial analysis showed that areas with better educational facilities and outcomes, such as metropolitan regions, exhibited higher labour absorption rates.
Increased migration into urban areas puts pressure on infrastructure, resulting in a shortage of formal housing, lower productivity levels, and increased competition for jobs. Consequently, urban areas with high population densities and many rural migrants experienced relatively lower labour absorption rates, despite being at or near economic hubs.
Low literacy and low urbanisation levels were accompanied by increased out-migration, which is the movement of people away from an area. According to Weir-Smith and Dlamini, provinces with negative net migration (where more people left than entered) generally had lower labour absorption rates. For example, according to Stats SA, Eastern Cape and KwaZulu-Natal – the provinces with the lowest consistent labour absorption rates (below 20%) – also had negative net migration rates between 2011 and 2022 of -62,629 and -10,067 people, respectively.
The researchers believe that to address spatial inequality, policymakers should address the individual needs of South African communities. Based on these geographic patterns of labour absorption, they offer several suggestions to guide policymakers in realising development interventions.
For example, regional development strategies could consider the spillover benefits from economic hubs and development corridors to surrounding areas, and target policies in these areas to reduce economic inequalities. The following map outlines development corridors that show potential for economic development and increased employment. The researchers identified the roads between Johannesburg in Gauteng and Durban in KwaZulu-Natal, and the N4 as having high developmental capacity.
Figure 2. Development corridors
Corridor data source: A Brand (2017), adapted by authors
The researchers also suggested that providing education and skills training tailored to the needs of different regions could increase the ability of people living in rural areas to pursue entrepreneurial economic endeavours successfully. Through tax incentives, policymakers could promote the growth of local industries, innovation and entrepreneurship in rural areas, to provide sustainable employment opportunities and reduce the reliance on urban migration.
Improving transportation networks and connectivity between rural and urban areas would better facilitate the movement of goods and people. This includes developing better roads, transportation systems, and digital infrastructure in high-potential areas to attract businesses.
“Work has been done on unemployment and its spatial patterns, but not on labour absorption,” said Weir-Smith in an interview with the HSRC Review. According to Dlamini, also interviewed, labour absorption rates and patterns are essential economic indicators that may inform the development of government policies and targeted interventions.
“It determines what type of intervention is required and where, for example, for municipal planning purposes,” Weir-Smith added.
Research contact:
Dr Gina Weir-Smith, Head: Geospatial Analytics in the HSRC’s Office of the Deputy Chief Executive Officer gweir-smith@hsrc.ac.za
Dr Simangele Dlamini, a senior research specialist in the HSRC’s Developmental, Capable and Ethical State sdlamini@hsrc.ac.za
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