Professor Ndzendze is a Senior Director and a professor of international relations at the University of Johannesburg (UJ). Professor Moloi is executive dean, College of Business and Economics, UJ.
They recently published an opinion article that first appeared in the Business Day on 09 July 2026.
The foundational assumption of international trade is that exports yield foreign exchange reserves, increased economic activity and possible improvement in employment levels. In other words, making and selling products to the rest of the world should result in more economic activity, and by extension the creation of job opportunities for the exporting economy.
Yet, South Africa continues to face the highest unemployment rate, especially among those aged 15 to 24. This is despite growing exports which yield a consistent surplus. From this perspective, it is clear that we must confront a South African paradox of our own times: high unemployment (especially among those aged 15 to 24) despite growing exports which yield a consistent surplus.
The data shows that there is no observable mutual growth between exports and employment in South Africa. Taking the 2020-2025 timeframe as a sample, we can observe an interesting paradoxical trend. The country’s total exports to the rest of the world grew from $85.6 billion to $116.6 billion, or 30.6%. The country had a trade surplus of $11.7 billion.
Despite this, the country’s unemployment has remained persistent. In 2020, the average expanded definition of unemployment (which factors in discouraged job seekers) was at 42%. Five years later, despite the evident growth in exports and surplus, it was reported at 42.7%. The unemployment rate for young people aged 15-24, it is higher still – at 60% per the 2026 Q1 Stats SA report (quarterly labour survey).
South Africa’s top four exports consist of platinum and related products, gold, and automotive products. For the years under review, the Stats SA reports show decline for these sectors in terms of employment. For example, the number of people employed in the mining sector decreased from 446,000 in 2024 to 444,000 by the end of 2025, a decline of 4.7% in spite of the 18% growth year-on-year in the same period for platinum exports (from $9.9 billion to $11.7 billion).
If South Africa’s strong export performance in goods has not translated into broad-based employment creation, the country’s services exports tell a similar story. On paper, the numbers relating to exports of services appear encouraging. Over 10 years, services exports grew from approximately R186 billion in 2014 to more than R263 billion in 2023, an increase of over 40% despite the severe disruption caused by the COVID-19 pandemic. After collapsing during lockdowns, services exports rebounded strongly, suggesting that South Africa remains internationally competitive in several service sectors.
Yet, the composition of those exports helps explain why rising export earnings have not significantly reduced unemployment. The largest contributor by far is travel services, which generated more than R120 billion annually before the pandemic and remains the dominant source of service export revenue. While we concede that tourism does create employment opportunities, many of them are seasonal, geographically concentrated, relatively low-paying, or vulnerable to external shocks such as pandemics, geopolitical instability, and exchange-rate volatility. A recovery in tourism receipts therefore does not necessarily translate into sustained employment growth across the wider economy.
Other areas of export growth are even less labour-intensive. For instance, the financial services exports increased from about R12.7 billion to R18.5 billion over the period in review, while telecommunications, computer and information services more than doubled. Exports of intellectual property, business services, and digital services also expanded steadily. These are positive developments for economic sophistication and productivity, but they tend to generate high-value output with comparatively fewer employment opportunities. A software firm can earn millions in foreign revenue without increasing the rate of its human capital, while a bank can expand its cross-border services without creating employment opportunities on the scale associated with manufacturing or construction.
The strongest growth outside tourism occurred in “other business services”, which more than doubled from R23.5 billion to over R50 billion. However, much of this category consists of specialised professional, legal, consulting, engineering, and corporate services that require advanced skills. In a country where unemployment is concentrated among those with lower levels of education and skills, export growth in these sectors often benefits a relatively small segment of the labour force.
The result is a paradox. South Africa is successfully exporting more services to the world and earning valuable foreign exchange, yet many of the sectors driving that success is either skill-intensive, capital-intensive, or concentrated among firms that can increase output without proportionately increasing employment opportunities. The problem, therefore, is not that South Africa is failing to produce goods and services it can export. It is that the country’s export basket, whether in goods or services, is not sufficiently linked to large-scale labour absorption.
Similarly to Similarly, David Autor’s empirical work which proved ‘that labor market adjustment is incredibly slow and painful’, we conclude the export growth alone, moreso taking into account the nature of South Africa’s exports cannot solve unemployment when the sectors generating that growth are structurally incapable of employing the millions of South Africans who remain outside the labour market.
To understand this paradox, one has to also employ the Paul Krugman’s foundation to modern trade theory, ‘The New Trade Theory’ which argues that while globalization overall increases economic efficiency and creates high-value job opportunities, it simultaneously shifts the composition of jobs, often increasing the premium on highly skilled labor while reducing demand for less-skilled workers in advanced economies. We think this is what is happening in South Africa’s ‘Trade/Employment Paradox’.
*The views expressed in this article are that of the author/s and do not necessarily reflect that of the University of Johannesburg.
