South Africa faces a series of macroeconomic challenges in the coming months that will strain its ability to address its most pressing need – more jobs. The macroeconomic policy approach taken in the recent time period largely adheres to mainstream tenets, emphasising low inflation and fiscal restraint. Since the Great Recession of 2008, however, those tenets have come under scrutiny, even by organisations such as the IMF.
High global levels of unemployment persist seven years after the onset of the crisis, underscoring the relevance of an alternative macroeconomic framework for both developed and developing countries in which the jobs deficit is the utmost priority. Among policymakers and scholars, the urgent need to stimulate employment coupled with multiple additional macro-level challenges has resuscitated attention to the importance of identifying a wider array of macroeconomic tools beyond the standard ones used in the past 25 years.
This policy brief discusses the recent macroeconomic approaches employed by the South African government with an emphasis on examination of the monetary policies adopted by the South African Reserve Bank. Their impact on the goals of employment creation and growth will be discussed. This will be followed by a review of alternative strategies potentially available to the South African government to address these challenges.