Can South Africa's employment targets be met in the context of the global economic crisis?

Abstract

The scenarios are updated in this paper to take into account the potentially dramatic impact of the global economic crisis (GEC). A straight path from historical to future employment figures will no longer be relevant, and therefore need to be interrogated. There is little doubt that employment growth will be affected for at least a few years, and could be affected for a decade. There is absolutely no certainty about the length of the downturn, as there are no true historical guiding experiences, only approximations. Scenarios are most useful in a period like this. Economic modelling and forecasting are less reliable in a period like this for a number of reasons. First, standard economic models generally assume variations within a status quo, that is, ceteris paribus - all things being equal. Second, economic models therefore tend to work within a range of possibilities and assume certain relationships. For example, a currency depreciation should make a country's exports more attractive, but not when most trading partners are also in decline. Third, the process of adjustment is built into a model's specifications, and yet the process of adjustment in this period will certainly be different to the norm. Finally, the economic situation is changing from week to week and requires understanding of how conditions might play out, rather than specific figures that are bound to mislead.