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Stellenbosch Policy Brief No. 04/2010

The policy brief studies unemployment between 1995 and 2007. The analysis is unique because it uses a pooled version of the labour market surveys available that enables the researcher to separate three influences that are often confused, namely time trends, cohort effects and the impact of age. The research dispels the myth of jobless growth in the early part of the 00’s and shows that this myth may have emerged due to a confusion of the influences of time trends, cohort effects and the impact of age. The analysis demonstrates that there is a strong association between unemployment and the business cycle. Additionally, it indicates that the youth unemployment problem may not be a failure of the labour market, but a failure of the education system. The push to eliminate overage learners in schools has contributed largely to the surge in unemployment for the youngest generations. Overage learners are no longer in school, but have evidently not shifted to adult education alternatives. Instead, they have entered the labour market, but without the necessary skills to be absorbed. This policy has therefore brought about a sudden and dramatic change in the labour market experience of the youngest individuals by speeding up the school to labour market transition.