Education is key to better labour market outcomes

Employment increased by 100 000 between the 1st and 2nd quarters of 2013. Despite this, the increase in unemployment by 122 000 resulted in an increase of 0,4 of a percentage point in the unemployment rate – from 25,2% to 25,6% between the two quarters. Year-on-year, employment rose by 274 000 while unemployment rose by 254 000.

Education plays an important role in the labour market in several respects. Graduates are more likely to be employed in the formal sector. As many as 97,3% were employed in that sector compared to 52,9% of persons whose education level was below matric level.

Working in the formal sector often comes with employee benefits such as access to medical aid, pension, and permanent contracts. Among employed graduates, 84,5% had pension fund benefits. In contrast, among the employed with less than matric, only 29,7% had access to such benefits. In terms of other benefits, 79,5% of employed graduates had access to medical aid contributions from their employer compared to 13,4% of persons whose level of education was below matric; and nine in every ten graduates (90,1%) had a permanent employment contract – nearly double that of those with less than matric.

Of the 4,7 million persons that were unemployed in the 2nd quarter of 2013, one in every two had not completed matric. Having tertiary education – particularly a degree – increases one’s chances of getting a job. The unemployment rate among graduates was 5,2% and that of persons with other tertiary qualifications (diplomas or certificates) was 12,6%. In contrast, the rate was 30,3% among those without matric.

It is clear that education plays an important role in labour market outcomes, influencing the sector in which people work and the benefits they receive. The results suggest that those who are better educated have lower unemployment rates and better access to employee benefits.