South Africa’s rising unemployment rate is more than a labour market issue, it is a strategic risk event unfolding in plain sight. With the official unemployment rate climbing to 32.9 percent and youth unemployment breaching 46 percent, the country faces an escalating crisis that threatens economic stability, undermines returns on capital and investor confidence, and threatens long-term social cohesion.
According to Volker von Widdern, Risk Principal at Riskonet Africa, the time for half-measures and static policy is over. “In economic terms, standing still means going backwards for employment,” he says. “When growth stalls, businesses either optimise through efficiency and automation, or shut their doors entirely. In both cases, jobs are lost and opportunity for employment contracts. If we continue to tolerate national budgets and economic policies that deliver subpar growth, we are compounding a long-term national threat.”
The latest Labour Force Survey underlines the depth of the problem, with over 10 million young people between the ages of 15 and 24 not in employment, education, or training. This structural exclusion from the economy is not merely a social challenge but an embedded economic risk. Von Widdern argues that a slow-growing economy cannot absorb the labour market pressure building every quarter and says risk managers, economic policymakers, and the private sector must treat low growth as a central strategic threat, not just a cyclical downturn.
What makes the current situation more perilous is that South Africa has normalised economic underperformance. Instead of pushing for high-impact investment and industrialisation, state spending is being crowded out by social relief programmes and public sector employment. This might delay short-term social instability, but it accelerates long-term economic fragility. Fiscal space is shrinking, investor sentiment is eroding, and the spectre of forced investments in prescribed assets and inflation-driven instability looms ever closer.
Von Widdern insists that South Africa has the tools to reverse this decline. He points to a range of available interventions, from unlocking infrastructure investment through third-party managed public-private partnerships, to offering foreign and local investors incentives linked to factory development, skills localisation, and technology transfer. But all of this requires decisive leadership and a coordinated national effort.
Instead of simply managing decline, he urges a shift in mindset. “We need a ‘Marshall Plan’ for investment. We need to use Special Economic Zones not just as geographical labels, but as engines of new industrial capacity, reduced red tape, and labour flexibility. And we need to treat employment not as a by-product of growth, but as a targeted outcome backed by risk-mitigated strategy.”
South Africa’s historic status as the Gateway to Africa is at risk. Competing African and Indian Ocean states are offering more attractive investment conditions and building deeper relationships with trade partners. If South Africa does not adapt and compete, it will lose not only capital but also credibility.
Von Widdern’ s call to the risk community is blunt. “We can no longer wait for policy to catch up. Risk professionals must lead, not follow. Our frameworks should not just protect against downside, they should be used to build the future. This is the time to act.”
