State of manufacturing in South Africa

Type Working Paper - DPRU Working Paper 201702
Title State of manufacturing in South Africa
Issue 201702
Publication (Day/Month/Year) 2017
Page numbers 1-17
The level of unemployment, poverty and inequality in South Africa is high in relation to the rest of the world. To overcome these three challenges, more and better jobs need to be created. A key source for these types of jobs can be found in the labour intensive manufacturing sector. Therefore, it is important to evaluate the performance of the South African manufacturing sector. We find that compared to other sectors of the economy, the manufacturing sector has performed poorly, both in terms of GDP growth and job creation. While all manufacturing subsectors showed GDP growth, that growth was marginal. Furthermore, although some manufacturing sub-sectors showed job growth, the rate of job losses in other manufacturing sub-sectors was far greater, resulting in overall job losses. We argue that the poor performance of the manufacturing sector can be attributed to increased competition from south-east Asia, and South Africa’s skills shortage.

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