Empirical Investigation into the Role of Agriculture in Employment Generation in South Africa

Abstract

Job creation is a primary goal for the South African government, with the agricultural sector seen as crucial for development and employment. However, despite agriculture’s vast potential, unemployment remains a significant issue. As a result, research on the relationship between agriculture and employment in South Africa is urgently needed. This study provides empirical evidence on whether agriculture has contributed to job creation in the South African economy. Using secondary data from 1990 to 2023, the analysis applied the Fully Modified Ordinary Least Squares technique and Pairwise Granger causality to examine this relationship. The findings from FMOLS highlight that agriculture significantly contributes to employment generation, as a one-unit increase in agricultural GDP contribution leads to a 13% reduction in the unemployment rate. Furthermore, the results from Granger causality analysis confirmed that no feedback relationship exists between agricultural GDP contribution and unemployment rate in South Africa. The study recommends for policymakers in South Africa and across Africa to boost employment by implementing strategies to enhance the agricultural sector’s contribution to GDP, given its significant impact on employment generation. Additionally, substantial investment in agriculture is essential to promote long-term job creation.