Fwd: Strike over - From our Chief Economist

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Wu Yuansheng


---------- Forwarded message ----------
From: Simon Baptist <*****@eiu.com>
Date: Thu, Jun 26, 2014 at 9:25 AM
Subject: Strike over - From our Chief Economist
To: *****@gmail.com

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Thursday, 26 June, 2014
Strike over
South Africa's long-running mining strike has finally come to an official end. After many years of poor economic policy, South Africa has lost its position as Sub-Saharan Africa's biggest economy. Now, it is ranked at just 6th in GDP per capita at market exchange rates. Unemployment is one big reason for this. Even using the official unemployment rate of 25%, which misses a lot of hidden unemployment and underemployment, the rate is one of the world's highest. South Africa's labour market faces pressure on two seemingly contradictory fronts: skills shortages and a lack of job creation. This has led to severe unemployment, coupled with a high incidence of labour disputes for those with formal jobs. Despite high unemployment, real wages in South Africa have grown by an average of 2.3% a year over the last decade, faster than the global average. This has kept job growth low.

South Africa is far from the only country facing difficulties from a bifurcation in its labour market. Many Middle Eastern economies struggle with creating well-paying jobs for locals, while also having to rely on armies of low-paid foreign workers. Other wealthy economies such as Japan and Italy have a situation where many young people struggle to get permanent jobs, while those that do have them enjoy generous conditions. The resultant inequality in income and political influence is raising tensions in the labour market. It sets the stage for future productivity problems as well, as young workers today miss out on early career skill development.

What is your experience of operating in labour markets globally, either as an employer or employee? Let me know on Twitter @Baptist_Simon or via email on *****@eiu.com. 

Best regards,

Simon Baptist
Chief Economist and Asia Regional Director

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