Closing the labour utilisation gap

South Africa suffers from extremely low labour utilisation, which interacts with other economic and social problems such as inadequate education, poor health outcomes, and crime. The causes are complex, and a range of policies looks to be required to reduce unemployment decisively. In some areas, OECD experience may point to promising approaches, such as on reducing the restrictiveness of product market regulation, increasing the degree of co-ordination of wage negotiations, weakening legal extension of collective bargaining agreements, and facilitating school-to-work transitions. In other areas the specific context of South Africa may call for additional or different approaches. In particular, rapid employment growth is unlikely to happen without improvement in overall economic growth, and it would help if that growth were more labour-intensive than in recent years. South Africa also needs to make particular efforts to improve basic education, and to continue to redress the spatial misallocation of the population, although these measures will not make a big difference to employment outcomes in the near term.

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