Unmasking South Africa's employment myths and the hidden crisis of inequality

I CONTINUE to experience significant discomfort with concepts that are applied uncritically across contexts, without regard for local social, spatial, and institutional conditions, particularly in economics.

Concepts such as employment, alongside financial instruments such as pensions and retirement annuities, often claim universal applicability while in fact reflecting historically contingent, West-centric designs. These frameworks presume stable wage labour, dense labour markets, and institutional continuity, conditions that are structurally absent or unevenly realised in much of Africa and the broader Global South.

While the concepts of employment and its opposite, unemployment, are widely discussed, applied, and perhaps seem well understood, there are subtle nuances that almost everyone misses. In South Africa, unemployment is deeply intertwined with socio-economic, legal, and political factors and cannot be reduced to a purely economic phenomenon.

When someone from rural Limpopo, for instance, studies at Wits, UKZN, or UCT and does not immediately secure a job after graduation, they often return home. In official labour statistics, this individual is frequently reclassified as “not economically active” rather than unemployed, despite possessing marketable skills and a demonstrable willingness to work.

This statistical reclassification conceals the fact that withdrawal from the labour market is seldom voluntary. Instead, it results from structural constraints: unaffordable urban living costs, weak transport links, the lasting spatial legacies of apartheid, and the lack of employment opportunities in rural economies.

Drawing on Amartya Sen’s capability approach, this situation is better seen as a deprivation of real freedoms to convert education and skills into meaningful economic participation rather than a genuine exit from the labour market.

Employment in South Africa must therefore be understood not merely as participation in wage labour, but as a function of spatial access, social reproduction, and institutional recognition. The binary distinction between employment and unemployment collapses complex lived realities into administrative categories that systematically underestimate exclusion while overstating labour market “exit”.

What appears statistically as inactivity often reflects deferred participation, enforced immobility, or survivalist engagement in informal, unpaid, or intermittent work. As a result, headline unemployment figures obscure both the depth of exclusion and the scale of wasted human capital, masking the political economy of labour absorption rather than illuminating it.

Therefore, the official unemployment rate of 31.9% (Q3 2025) is highly inaccurate, as it provides only a narrow snapshot of labour market engagement and hides broader patterns of underutilisation and structural exclusion.

Building on this, a more analytically sound approach would shift focus from headline unemployment rates to labour underutilisation and capability suppression. Measures that include discouraged workseekers, involuntary inactivity and marginal attachment to the labour market already reveal a far deeper crisis than the official rate suggests.

Yet even these broader indicators remain bound to a labour-market imaginary that prioritises formal wage employment and spatial immobility. They continue to question whether individuals are participating in the market, rather than whether the market and the surrounding institutional framework allow participation in the first place.

From a capability perspective, following Amartya Sen, the central issue is not just the absence of jobs but the systematic erosion of the conditions needed to turn education, skills, and aspirations into valued forms of work. Where transport costs surpass expected wages, where housing markets exclude newcomers, and where rural economies are structurally disconnected from centres of accumulation, “choice” becomes a legal fiction.

Labour market categories then serve a depoliticising role: they transform structural immobility into individual inactivity and institutional failure into personal non-participation.

This has significant normative and policy implications. Treating unemployment as a narrow economic indicator encourages technocratic responses, skills programmes, job-matching platforms, or incentives for labour flexibility, while leaving intact the spatial, fiscal and governance arrangements that reproduce exclusion.

By contrast, understanding employment as a socially embedded capability foregrounds questions of spatial justice, public investment, transport infrastructure, housing policy and the recognition of informal and reproductive labour. It also exposes the limits of importing policy instruments designed for high-income, fully monetised labour markets into contexts where livelihoods are plural, hybrid, and often territorially constrained.

In this context, South Africa’s unemployment crisis is not just a failure to create jobs but also a failure of institutional imagination. Relying on outdated categories of employment and inactivity hides the real experiences of labour, misinterprets the causes of exclusion, and ultimately limits the range of credible policy options.

Therefore, a recalibration is necessary, one that views employment not as a universalised status to be measured but as a social relation specific to each context that should be enabled.

Similarly, financial instruments such as pensions and retirement annuities are also presented as universal mechanisms of economic security. They assume stable, long-term wage employment, predictable income streams, and consistent institutional involvement throughout life. These conditions mirror the labour histories of industrialised welfare states rather than the fragmented, hybrid livelihood structures common across much of Africa and the broader Global South.

In South Africa, contributory pension and retirement annuity systems naturally reward consistency and penalise disruptions. Livelihoods shaped by informality, circular migration, or repeated labour-market exclusion are often linked to weak or non-existent retirement protection.

Graduates moving between job searching and rural return, and informal workers with inconsistent earnings, are structurally excluded. Retirement insecurity, therefore, arises not as a personal failure but as a foreseeable result of financial tools that do not align with social realities.

From a capability perspective, following Sen, the issue is not access to financial products but the lack of genuine freedoms to use them meaningfully. When income is unstable, and survival is immediate, long-term financial deferral becomes irrational rather than irresponsible.

By universalising contributory pensions, policy shifts responsibility onto individuals while extending labour market exclusion into old age, perpetuating inequality over time rather than alleviating it.

Employment and pensions expose a deeper crisis of belonging, dignity and state legitimacy: when access to work and old-age security is controlled by exclusionary market logics, vast segments of society become institutionally invisible.

Reframing both within tax-funded, non-contributory frameworks would transform social protection into a social right rather than a reward for formal labour participation in an informal and jobless context.

Siyayibanga le economy!

* Siyabonga Hadebe is an independent commentator based in Geneva on socio-economic, political and global matters.

** The views expressed here do not reflect those of the Sunday Independent, Independent Media, or IOL.

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