Tilting the playing field: Labour absorbing growth and the role of industrial policy

South Africa faces a severe problem of persistent structural unemployment. This results not only from low growth but more importantly from the pattern of growth over many decades. The recent recession aside, there has for the past several years been a significant improvement in South Africa's growth performance. However, although new jobs have been created, this has been at a frustratingly slow pace and it would be difficult to argue that there has been a structural shift to a more labour demanding growth path. The data remain controversial but even the more optimistic projections show that very large scale unemployment will remain a major problem even under quite optimistic growth scenarios. If it were not for increased social payments, poverty would have continued to increase over the period.