AN ANALYSIS OF THE SHORTAND LONG-RUN EFFECTSOFECONOMIC GROWTH ON EMPLOYMENT INSOUTHAFRICA

• Main Author: Daniel Francois Meyer
• Format: Article
• Language: English
• Published: Social Sciences Research Society 2017-01-01
• Series: International Journal of Economics and Finance Studies
• Online Access: http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/IJEF_2017_1/d-francois.pdf

In any economy, employment growthat faster rates thaneconomicgrowth isessentialinreducingunemploymentlevelsandfacilitatingeconomicdevelopment.Employmentcreationisone ofthemaincornerstonesof anyeconomy.Globallynew employmenthas been difficult to achieve,especiallywithin a loweconomicgrowth environment.High levels ofsustainedunemploymentrelate tostructural weaknessesin aneconomy.South Africa hasone of the highest rates ofunemploymentin the worldof more than 27percent,withassociatedlow economic growthand relativelyhighlevels of inflationandinterest rates.The objective of thisresearchwasto analyse thestatus quoregardingemploymentand the relationship with economic growthmeasured asgrowth ingross domestic product (GDP)in South Africa.The study usedeconometrictime-seriesmethods to test for a longand short-run relationshipbetween employment and economic growth byutilisingquarterly data from 2002to 2016.Variables included in the study consisted of employment, real GDP,inflationrateand the repo rate. Thestudy found long-run cointegratingrelationships amongst the variables.The analysis indicated that South Africahasexperienced an employment coefficient of 0.96.In terms ofGranger-causalityanalysis, the study found that economic growth andrepo ratecause changes inemployment.Recommendationswerealsomaderegardingsolutions for jobcreation in South Africa which should have an impacton futurepolicyformulation.