Makhele
Public sector economist and social activist Tiisetso Makhele has highlighted that the rising unemployment rate in the Free State province underscores the urgent need for industrialisation to drive economic growth and job creation, as recent Statistics South Africa data reveals a concerning increase in joblessness despite some positive shifts in employment figures.
Bloemfontein – Public sector economist and social activist Tiisetso Makhele has pointed out that the rising unemployment rate in the Free State province shows the urgent need for industrialisation to boost the economy and create jobs. In his analysis shared on 13 August 2025, Makhele stressed that the latest Statistics South Africa (StatsSA) data for the second quarter of 2025 paints a worrying picture, with the official unemployment rate climbing to 38.5 percent in the Free State. This comes amid national trends where South Africa’s overall joblessness edged up to 33.2 percent, highlighting the need for bold strategies to tackle persistent challenges like low industrial output and reliance on consumer-driven sectors. Makhele, writing in his personal capacity, called for an aggressive push towards manufacturing and production to reverse these trends and build a more resilient economy.
Latest Unemployment Statistics: A Mixed Picture for South Africa and Free State
Statistics South Africa released the Quarterly Labour Force Survey (QLFS) for the second quarter of 2025 on 12 August, showing that the national official unemployment rate rose by 0.3 percentage points from 32.9 percent in the first quarter to 33.2 percent. This increase translates to 140,000 more unemployed people, bringing the total to 8.4 million. The expanded unemployment rate, which includes discouraged work-seekers who have given up looking for jobs, dipped slightly by 0.2 percentage points to 42.9 percent, offering a glimmer of hope amid the gloom.
In the Free State, the situation is even more pressing. The official unemployment rate climbed by 0.6 percentage points from 37.9 percent to 38.5 percent, placing the province among the hardest hit. However, not all indicators are negative. Employment in the province grew by 12,000 jobs, rising from 754,000 in the first quarter to 766,000. This modest gain reflects some resilience in key areas, but it falls short of addressing the broader crisis.
A standout positive is the sharp drop in discouraged work-seekers, down by 40,000 in the Free State. Discouraged workers are those ready to work but who have stopped searching due to repeated failures, lack of skills, or other barriers like discrimination. This reduction has helped lower the province’s expanded unemployment rate to 43.8 percent, ranking it third lowest nationally behind the Western Cape at 27.0 percent and Gauteng at 39.2 percent. Nationally, the number of discouraged work-seekers fell by 147,000 to 3.9 million, contributing to the slight dip in the expanded rate.
Youth unemployment remains a critical concern, with rates exceeding 45 percent nationally for those aged 15-34, and even higher in provinces like the Free State. The data also shows uneven job gains: formal sector employment increased by 135,000, but informal jobs dropped by 14,000 in the Free State alone, from 153,000 to 139,000. This decline in informal work, a lifeline for many unskilled and poor individuals, adds pressure on households already struggling with rising living costs.
Sector Breakdown: Reliance on Tertiary Industries Hinders Growth
Makhele’s analysis delves into employment by sector, revealing a heavy dependence on tertiary industries like government, trade, and finance in the Free State. These sectors dominate, but they do little to drive production or exports. Manufacturing contributes just 14 percent to the provincial economic output and employs only 9.9 percent of workers – figures that are alarmingly low for a region with untapped potential in agriculture and minerals.
“This means that the Free State’s economy is lacking on the production side, and is a mere consumer of goods produced elsewhere,” Makhele noted. He warned that such “bubble” industries are vulnerable to economic shocks, like inflation or global downturns, and fail to create sustainable jobs. Nationally, similar patterns emerge, with community and social services adding 158,000 jobs in Q2, while manufacturing lost 3,000 positions, underscoring the need for diversified growth.
Agriculture, a traditional stronghold in the Free State, saw mixed results. While the province benefits from vast farmlands producing maize, wheat, and sunflowers, employment in this sector remains seasonal and low-wage, with climate change adding risks like droughts that affected harvests in 2024. Mining, another key area with gold and diamond resources, has seen job losses due to declining global demand and operational challenges at ageing mines.
Urgent Call for Industrialisation: Lessons from Global Success Stories
Makhele argued that the data demands an “aggressive industrialisation trajectory” for the Free State to counter rising unemployment. “Now, more than ever before, the Free State, in particular, must embark on an aggressive industrialization trajectory, which will see industries operating and creating jobs,” he said. Industrialisation, he explained, is key to transforming raw materials into finished goods, boosting exports, and generating employment across value chains.
Drawing from international examples, Makhele cited the Asian Tigers – South Korea, Taiwan, Singapore, and Hong Kong – which transitioned from agrarian economies to industrial powerhouses in the late 20th century through focused policies on manufacturing, education, and infrastructure. South Korea, for instance, invested heavily in steel, electronics, and shipbuilding, achieving unemployment rates below 4 percent today. Similarly, the People’s Republic of China lifted millions out of poverty by prioritising export-led industrial growth, with its manufacturing sector employing over 200 million people and contributing 30 percent to global output.
In the Free State context, Makhele suggested leveraging local resources like agriculture for agro-processing industries, such as food canning and biofuel production, which could create thousands of jobs. Mineral beneficiation – turning raw gold and diamonds into jewellery or industrial products – could add value and reduce reliance on exports of unprocessed goods. Government incentives, like tax breaks for factories in special economic zones (SEZs) such as the Maluti-a-Phofung SEZ in Harrismith, could attract investors. This zone, established in 2017, has potential for automotive and logistics hubs but has faced delays due to infrastructure gaps.
Nationally, South Africa’s Industrial Policy Action Plan (IPAP) and the Economic Reconstruction and Recovery Plan (ERRP) post-COVID emphasise reindustrialisation, but implementation in provinces like the Free State has been slow. Makhele’s call aligns with these, urging faster action to stem job losses.
Challenges in the Informal Sector and Policy Recommendations
The drop in informal sector employment by 14,000 to 139,000 in the Free State is particularly alarming, as this area serves as a safety net for unskilled workers excluded from formal jobs. Informal trading, street vending, and small-scale services provide livelihoods for many, but face hurdles like lack of access to credit, regulatory barriers, and competition from big retailers.
Makhele recommended a focused policy to support this sector: “The Free State must develop and implement a focused policy for the informal sector, which will ensure that jobs in that sector are retained, new ones are created, and that there is an effort to ensure enterprises transition into the formal sector of the economy.” He advocated for strategic linkages between formal and informal economies, such as supply chains where small vendors partner with factories for distribution.
Examples from other provinces offer models: Gauteng’s Township Economy Revitalisation Strategy has provided grants and training to informal traders, leading to formalisation and job growth. In the Free State, initiatives like the township revitalisation programme could integrate informal workers into agro-processing value chains, turning street food sellers into suppliers for larger firms.
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