UNEMPLOYMENT RATE, NATURAL UNEMPLOYMENT, AND CYCLICAL UNEMPLOYMENT IN THE REPUBLIC OF SOUTH AFRICA (2015–2024): A THEORETICAL AND EMPIRICAL ANALYSIS

This paper provides a comprehensive theoretical and empirical analysis of unemployment in the Republic of South Africa over the period 2015–2024, focusing on three interrelated dimensions: the dynamics of the actual unemployment rate, the estimation of the natural rate of unemployment, and the calculation of cyclical unemployment. Empirical data show that South Africa’s unemployment rate fluctuated persistently between 25% and 34% — far above the estimated natural rate of 6–8% and well above international benchmarks for developing economies. Using the standard cyclical unemployment formula, the paper estimates that cyclical unemployment ranged between 18% and 27% throughout the study period, indicating a chronic and substantial deviation of actual employment from its potential equilibrium level. The analysis draws on Keynesian, neoclassical, and NAIRU frameworks to interpret these findings and concludes that South Africa’s labour market is characterised by a persistent “high unemployment equilibrium” rooted in structural imbalances, institutional weaknesses, and insufficient aggregate demand.