Over the last 15 years, South Africa’s productivity has stayed constant at little over R200,000 of GDP output per employed worker. This was disclosed by financial services company PwC in its South Africa Economic Outlook for March 2024, which also described the low productivity of the nation.
Any economy needs productivity because it enables nations to generate more products and services with the same or less resources. According to PwC, it is essential for increasing employment prospects, which raises incomes and improves living standards for people both nationally and in households.
Real GDP per employed worker is a commonly used metric to analyze a nation’s productivity as it assesses the output of its workforce.
This measure shows that South Africa’s productivity has only marginally increased since 2008 and has not showed any net gain between 2015 and 2023. The GDP output per employed worker has fluctuated between peaks and troughs between 2008 and 2023, averaging R200,000 year.
Six major productivity drivers in South Africa were identified by the firm, ranked in order of significance.
- Labour force and human capital
- physical capital
- Social capital
- Natural capital
- Innovation and Intangible capital
- Institutions
According to PwC, increasing productivity is critical since it spurs economic growth. It helps societies thrive sustainably and fairly while also fostering innovation and jobs.
Nonetheless, South Africa was placed 80th out of 170 nations in the World Bank’s analysis about productivity growth between 2015 and 2021. As indicated by GDP per employed person, the local productivity growth rate during this time was just two-thirds of the world rate.
According to PwC, one of the simplest methods to boost an economy’s performance is to facilitate the flow of capital, ideas, goods, and people. For this reason, it is imperative that the government comprehend how to increase South Africa’s productivity.
Nonetheless, South Africa was placed between 80th and 82nd out of 170 nations in the World Bank’s analysis about productivity growth between 2015 and 2021.
As indicated by GDP per employed person, the local productivity growth rate during this time was just two-thirds of the world rate.
Productivity is important because it fosters resource optimization and innovation. According to Lullu Krugel, chief economist at PwC South Africa, “this in turn spurs economic growth and increases global competitiveness, making the country more attractive to investors.”
A more competitive economy benefits the economy by generating more tax income and exporting more goods, which helps to reduce the current account and budget deficits.
According to her, “high productivity also better equips economies to withstand shocks and recover from economic downturns.”
“A more productive economy might also translate into greater earnings and wages for South Africa, directly raising living standards and quality of life.”
However, because of problems like load-shedding and relatively recent inefficiencies in logistics, the nation’s production has essentially stagnated during the past 15 years.
The productivity of South Africa is displayed below based on real GDP per employed worker.
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