Sectoral labour productivity and unemployment in South Africa

This study investigates the relationship between sectoral labour productivity and unemployment in South Africa by answering the question how has labour productivity across different sectors affected employment rates in South Africa? Both descriptive statistics and inferential statistics (Augmented Dickey–Fuller and Phillips-Perron tests and Autoregressive Distributed Lag Bound test and estimation techniques) were applied on obtained timeseries data for the period 1991-2022. The analysis surprisingly shows that none of the sectoral labour productivity variables contribute to unemployment reduction in the country. Plausible reasons for this finding include the adoption of automation and technological advancements in labour intensive, imbalance between rate of job loss in labour intensive sector and rate of job creation in the service sector during sectoral shifts and economic transition, and general lower purchasing due to unequal distribution of labour productivity gain and income inequality that could have boosted consumer demand, these measures can stimulate economic growth and job creation. Various recommendations are suggested to reduce unemployment in the light of these findings.