At the beginning of apartheid, industry, mining and commercial agriculture were competing over a seemingly tiny pool of labour. By the end of the 1970s, however, this labour shortage had turned to dire levels of unemployment. This process of shortage to undesirable surplus did not happen in a vacuum. Rather, the rise of unemployment from the 70s, 80s and even onward, was a result of central planning gone wrong. This article will be timelining the process from labour shortage to unemployment, and how apartheid central planning and policy resulted in an inability for the market to properly react and adapt to the state of the economy. This rise of unemployment because of state action can be seen as one of the fundamental failures of the apartheid system.
During this time, the South African economy was benefitting from a worldwide golden age in the post-war economy, as well as unexpected gold booms that allowed mines to pay higher wages and support the general economy through a trickling effect. This led to economic growth up until the 70s, creating job vacancies that many employers struggled to fill.
Before and in the early days of apartheid, unemployment wasn’t an issue. Rather, the economy was faced with what many perceived as labour shortages, that would need to be addressed through higher wages or coercive means. The Department of Native Affairs stated that no Africans were ‘involuntarily unemployed’ during the mid to late 40s. Rather, mines and farmers struggled to find sufficient workers, as they competed with higher wages in the manufacturing sector (which was also struggling to find workers). Commercial farmers lobbied for state labour controls, but only made headway when the National Party was elected – as half of National Party parliamentarians had farming backgrounds. In an effort to please this lobby and a large constituency of white farmers, 1954 onwards saw a variety of policies channel African labour to agriculture and mining, in the form of influx controls to urban areas and designation of supply areas for agriculture.
The pass system was created as a response to the farming and mining lobbies and an ideology of the “lazy African”. It was formulated as a way to distribute labour in a manner the state deemed most efficient – essentially centrally planning labour distribution by controlling the movement of African workers. The pass system, in fact, worked too well for farms, and by the 60s, farms were receiving a surplus of workers, many of whom were sent away. The ‘too well’ is an important phrase here. Labour distribution by state planning was causing surpluses of labour in the farmlands while neglecting the cities. As Fourie and Mariotti argue, this system led to many industries becoming capital intensive rather than labour intensive, as higher wages and influx control made employment too costly.
While labour was being channelled to mines and industry, peasant agriculture (as Nattrass and Seekings call it) in rural areas, and the so-called bantustans, was being destroyed through land seizures and state-planning policies such as the ironically-called rationalisation policy.
By the end of the 70s, unemployment had skyrocketed. Whatever semblance of economic success apartheid had had beforehand was in spite of its policies, rather than because of them, as the policies of central planning were no longer being held up by a flourishing gold trade, and international events racked the South African economy. Despite efforts to build an independent manufacturing sector, industry proved to be too weak and still needed to rely on protectionism. This crash led to stagnation in the manufacturing industry for over 13 years. This stagnation was coupled with rising inflation, initially caused by external factors but then exacerbated by the rising cost of goods as import prices rose. Protected industries were still running into balance of payment issues, which resulted in a loss of business confidence. The loss of essential imports due to tariffs and then sanctions added to this decline in confidence.
Feinstein argues that the decline of gold and the inability of the manufacturing sector to grow were the fundamental contributions to the rise of unemployment and economic decline. What is abundantly clear is that the South African economy was over reliant on gold, but that efforts to break away from a gold reliance were inept. Protectionism bred weak industries that were incongruent with the domestic market and were unable to compete globally. Artificial labour shortages caused by influx controls and job reservations, also caused artificially high labour costs, which further inhibited manufacturing. By the time that labour shortages had turned into mass unemployment, industry was too stunted to absorb the vast majority of workers.
Even during this decline, the apartheid state continued its central planning. The 70s and 80s saw forced removal of African people from white-owned farms to unfarmable terrain (effectively cities outside of the city). These urban settlements in rural areas had little to no job opportunities. They could not be farmed, and they were too far away from work in the cities.
This process of race-based job reservations, influx controls and pass systems, forced removals and destruction of peasant agriculture, resulted in higher wage costs, a stunted economy and a lack of any alternative to formal employment. While the destruction of informal work was meant to push African workers to farms, mines and factories, when the formal economic couldn’t pick up the slack, people had nothing to fall back on.
Unemployment was long in the making. When the economy was good, the country could absorb bad policies, but when there was a slight shift, the tower came crumbling down. Labour shortages, exacerbated by central planning and policy, turned to stunted industry and then mass unemployment. Even when the state recognised this unemployment, they did not cease their central planning, continuing influx controls and bad policy. Unemployment is one of many failures of the apartheid system, but one that hit people the hardest. The important thing is to acknowledge that it was the system itself that was to blame, and not just a freak accident of the market.
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The Rise of Unemployment in Late Apartheid Bibliography
Feinstein, Charles. An Economic History of South Africa: Conquest, Discrimination and Development. Cambridge: Cambridge University Press, 2005.
Fourie, J and M. Marriotti. “The economics of Apartheid: An introduction.” Economic History of Developing Regions 29, no. 2 (2014): 113 – 125.
Nattrass, N. and J. Seekings. Class, Race, and Inequality in South Africa. New Haven: Yale University Press, 2005.
 N. Nattrass and J. Seekings, Class, Race, and Inequality in South Africa, (New Haven: Yale University Press, 2005), 165.
 Ibid., 166.
 Charles Feinstein, An Economic History of South Africa: Conquest, Discrimination and Development (Cambridge: Cambridge University Press, 2005), 144.
 Nattrass and Seekings, Class, Race, and Inequality in South Africa, 165. Nattrass and Seekings debate in great detail the definition and measurement of unemployment and employment, but such a discussion is too in depth to be included in this essay.
 Ibid., 167.
 Ibid., 168.
 Ibid., 168.
 Ibid., 169.
 Ibid., 170.
 J. Fourie and M. Marriotti, “The economics of Apartheid: An introduction,” Economic History of Developing Regions 29, no. 2 (2014): 114.
 Nattrass and Seekings, Class, Race, and Inequality in South Africa, 165.
 Feinstein, An Economic History of South Africa: Conquest, Discrimination and Development, 202.
 Ibid., 188. This protectionism was at the expense of consumers, as prices compared to superior imports were much higher. The domestic market for local goods was also too small, requiring an export market that was never achieved.
 Ibid., 213.
 Ibid., 215.
 Ibid., 221.
 Ibid., 223.
 Ibid., 222.
 Nattrass and Seekings, Class, Race, and Inequality in South Africa, 186.