3% economic growth will not solve SA’s high unemployment issue
· Citizen
South Africa’s business-government partnership has set a target of 3% economic growth by 2030 for phase three, but reaching it will not be a silver bullet for the country’s unemployment crisis.
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While that level of growth could help the economy create enough jobs to absorb new entrants to the labour market, it is unlikely to dramatically reduce the millions of people already without work, Professor of Economics at the North-West University, Waldo Krugell, told The Citizen.
The business-government partnership is a formal collaboration between the country’s public sector and private businesses to address major economic bottlenecks, boost investment and create jobs.
New year, same economic target
The partnership, established in 2023, brings together government officials and CEOs to tackle national crises that neither sector can solve alone.
The third phase was launched in Gauteng late last week. However, this is not the first time President Cyril Ramaphosa has set a 3% economic growth target. The president set the same target last year, but the economy fell well short, growing by just 1.1% in 2025, after expanding by 0.5% in 2024.
But growth at this level is not enough to meaningfully reduce unemployment. Economic growth creates jobs when businesses expand, invest and increase production, which drives demand for more workers. However, when growth is too weak, the economy may only create enough jobs to absorb new entrants to the labour market, rather than significantly reducing the existing pool of unemployed people.
Economic target, simply put
Krugell said the target is best understood as growth of more than 3% per year, not a once-off 3% lift. The one million jobs target appears to mean additional net jobs by 2030, though the formal metrics still need to be published.
If economic growth is around 3%, as the partnership desires, the country could potentially create enough jobs to absorb new entrants to the labour market. This can help prevent unemployment from worsening.
“The key point is that 3% growth is a threshold, not a victory line. At that pace, South Africa may start creating enough jobs to absorb new labour-market entrants, but it is unlikely to reduce unemployment dramatically.”
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If growth is above 3%, the economy will have a better chance of reducing the existing pool of unemployed people. Krugell added that this is especially true if the growth is labour-intensive.
“To make a real dent, growth must be faster and more labour-intensive, especially through tourism, agriculture, agro-processing, infrastructure and small-and-medium enterprises (SMEs).
“Phase 3’s credibility will depend less on headline targets than on whether it can change the composition of growth so investment turns into large-scale employment.”
Business remains optimistic
Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso welcomed the partnership’s targets, saying the country has brilliant people to deliver the growth.
“South Africa has enormous potential. We have brilliant people capable of achieving remarkable things, from our sporting achievements to globally flourishing companies.
“Mobilising our best people – from across business and government – to focus on the task of growing our economy by at least 3% will result in success. And last week, at the launch of phase 3 of the business-government partnership, I had a real sense that we are heading toward success.”
BLSA is an independent organisation that represents CEOs and leaders of the country’s largest and most prominent companies. Mavuso is also part of a partnership of at least 140 CEOs, with the BLSA chairman and Discovery Group CEO Adrian Gore serving as co-convenors.
Partnership’s achievements
The first phase was primarily designed as an emergency response to “steady the ship” amid severe national crises. The objective was to resolve grid failures and logistics bottlenecks. Load shedding has since dramatically reduced and critical port performance has stabilised.
Phase 2, launched in 2024 and concluded last week, shifted its focus from crisis management toward implementing structural reforms to future-proof the economy. The goal was to mobilise business resources to build long-term institutional capacity within the state and open up previously restricted network industries to private sector participation.
The phase also focused on fixing systemic vulnerabilities in the country’s financial and criminal justice systems. Phase 2 achieved its core reform benchmarks, creating a stable macroeconomic platform. Landmark successes from this phase include the country’s official exit from the Financial Action Task Force (FATF) grey list, alongside international credit rating upgrades from both S&P and Fitch.
While long-term tasks like eradicating systemic crime remain ongoing, the structural changes were successful enough that the Presidency officially closed phase 2 in August 2026 to transition into phase 3, which pivots entirely toward driving 3% GDP growth and creating one million new jobs.
Phase 3 tiers
Mavuso noted that the third phase is built on three tiers. “First, conclude the reforms required in the growth-enabling sectors, energy and transport and logistics.
“Second, focus on a few key sectors in which SA has a global competitive advantage, have the potential to create many jobs, and which have underperformed relative to their potential – namely: mining, agriculture, tourism and infrastructure.
“Third, focus on the confidence multipliers that are key to marshalling investment – namely, crime and corruption, a more evidence-based ‘SA Inc’ narrative, and the City of Johannesburg.”