Essay about Economic Crisis Of South Africa

1285 Words Nov 12th, 2014 6 Pages
Economic Crisis in South Africa Unemployment in South Africa is a major problem, that the country has to face. The main problem of unemployment in South Africa is wage bargaining. The effects of the problem is high prices, less labor and an increase of wages. Many different efforts have been made by South Africa to approach this problem. The only way to completely stop unemployment is to fix the wage bargaining as a whole. The number one cause for the unemployment in South Africa, is wage bargaining. It is when “Collective bargaining between large incumbent firms and powerful unions leads to high prices and wage settlements about the market clearing levels” (Yueh). Wage bargaining doesn’t respond well with the economic conditions. It outstrips the productivity, which causes them to hire less labor. By outstripping the productivity it leads to the increase in the prices and the increase in wages. The industry level bargaining drastically leads to the decline of employment, by 8 to 13%.
Unemployment in South Africa is the third highest in the world, and which is a huge statistic. The ages between 15 to 24 have an unemployment rate around 50%. Another insane fact is that one in two people cannot find a job. The unemployment rate has not been below 20% for the last 17 years, and finding jobs now is the biggest concern. This now is a huge threat to the countries political stability, causing it to spiral out of control. The Labour Markets are at an all time low, only 54% of…

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