AN ANALYSIS OF THE SHORT AND LONG-RUN EFFECTS OF ECONOMIC GROWTH ON EMPLOYMENT IN SOUTH AFRICA

Yıl 2017, Cilt: 9 Sayı: 1, 177 - 193, 01.02.2017

Daniel Francois Meyer

Öz

In any economy, employment growth at faster rates than economic growth is
essential in reducing unemployment levels and facilitating economic
development. Employment creation is one of the main cornerstones of any
economy. Globally new employment has been difficult to achieve, especially
within a low economic growth environment. High levels of sustained
unemployment relate to structural weaknesses in an economy. South Africa has
one of the highest rates of unemployment in the world of more than 27 percent,
with associated low economic growth and relatively high levels of inflation and
interest rates. The objective of this research was to analyse the status quo
regarding employment and the relationship with economic growth measured as
growth in gross domestic product (GDP) in South Africa. The study used
econometric time-series methods to test for a long and short-run relationship
between employment and economic growth by utilising quarterly data from 2002
to 2016. Variables included in the study consisted of employment, real GDP,
inflation rate and the repo rate. The study found long-run cointegrating
relationships amongst the variables. The analysis indicated that South Africa has
experienced an employment coefficient of 0.96. In terms of Granger-causality
analysis, the study found that economic growth and repo rate cause changes in
employment. Recommendations were also made regarding solutions for job
creation in South Africa which should have an impact on future policy
formulation.

Anahtar Kelimeler

Employment, economic growth, jobs, South Africa, unemployment