South Africa has achieved a lot since 1994, when ANC-led government took office. The
Performance of the economy since 1994, as measured by the growth rate, has been
encouraging with an average growth rate of approximately 2.8% per annum. The inflation
rate has been recently under control at between 3% and 6% per annum, the inflation
target set by the South African Reserve Bank (SARB). Despite this success problems of
unemployment and poverty are still very much with us and have not yet begun to
diminish unambiguously. Poverty is around 45% to 50% while broad unemployment rate
is somewhere around 26% to 40%. This paper attempts to reexamine the debate on
whether SA is experiencing jobless or job creating growth in the context of Okun’s law.
Making use of the Structural Vector Autoregressive (SVAR) technique to characterize
the dynamics of employment in response to output shocks, this study concludes that
while an increase in output increases total employment in general; nevertheless there are
some sectors (such as primary and secondary sectors) where the impact of output shocks
has been negligible.