Labour union UASA has said that the meagre growth of 1.1% in employment underpinned by employment contracts over the past 15 years, compared with the 108% growth in the number of people working without employment contracts, means that people are creating work for themselves.

The ‘UASA Employment Report 2026’, produced by market research company the Bureau of Market Research (BMR), shows that South Africa's labour market is undergoing significant structural transformation within a constrained economic environment.

Over the period from 2010 to 2025, there was 28% growth in the total number of workers in the economy, but with very limited growth in those with an employment contract. About 41% of workers in South Africa operate outside formal contractual employment arrangements, said BMR research director Professor Carel van Aardt on May 22.

“This has massive implications because it is clear that, in the low-growth and low-labour-absorption environment, people are creating work for themselves.

“This is important to take into account and should nudge official statistics to take a broader production boundary into account for their labour statistics publications,” he said during a presentation of the report's findings.

Weak economic growth, infrastructure bottlenecks, elevated unemployment and subdued labour absorption continue to limit the economy’s ability to generate sufficient formal employment opportunities.

However, there are substantially more South Africans participating in productive economic activity than official employment statistics suggest. A growing share of labour market participation increasingly occurs through informal, casual, self-employed, subsistence and other non-standard forms of work, the report showed.

Economic growth remains insufficiently labour-intensive to materially reduce unemployment, and South Africa’s economic outlook remains constrained by weak growth, infrastructure limitations, logistical inefficiencies and subdued investment, the report found.

ADDRESSING UNEMPLOYMENT
The Ability to Address Unemployment Sub-Index in the report continues to present the most concerning long-term trend.

It declined persistently between 2010 and 2019, which indicates a gradual deterioration in the economy’s ability to absorb labour market entrants and reduce unemployment pressures.

Between 2021 and 2025, the index remained at historically low levels, reflecting persistently weak labour absorption and elevated structural unemployment. This index declined further from 22.4 points during fourth quarter of 2025 to 15 points during first quarter of this year, which indicates renewed deterioration in the economy’s capacity to address unemployment pressures.

“The continued weakness in the ability to address unemployment highlights the extent to which labour force growth continues to outpace employment creation. This means that the South African economy has become progressively less effective at generating sufficient employment opportunities to absorb labour market entrants,” the report authors said.

This trend is particularly significant because it points toward deep structural labour market weakness rather than temporary cyclical weakness. Even during periods of moderate economic recovery, the economy has remained unable to generate employment growth at a pace sufficient to reduce unemployment meaningfully.

Further, the relatively modest growth in compensation growth suggests that improvements in labour income have remained insufficient to offset broader cost-of-living pressures experienced by households, the report noted.

Meanwhile, although official labour market statistics continue to portray exceptionally high unemployment and weak labour absorption, broader evidence suggests that a growing share of economic activity is taking place outside traditional formal employment structures.

This indicates that substantially more South Africans may be participating in productive work activities than conventional employment measures imply. However, much of this work is likely characterised by low productivity, unstable income, limited legal protection and minimal access to social security systems.

The expansion of non-contractual work raises concerns about employment quality, income security, worker protection, productivity and long-term economic sustainability.

Therefore, broader labour participation did not necessarily imply widespread economic security or improved living standards, UASA said.

The expansion of labour market participation without corresponding growth in secure and productive employment may therefore contribute to rising economic vulnerability despite increased economic activity.

The transformation of South Africa's labour market, as the distinction between formal employment and broader economic participation continue to blur, means that labour market institutions, organised labour structures and public policy frameworks may increasingly need to adapt to a labour market in which non-contractual, informal and flexible work arrangements constitute a structurally significant component of economic activity, the union said.

The findings of the report carry important implications for labour policy, economic planning, taxation systems, social protection frameworks, skills development strategies and organised labour representation in the years ahead, the report authors added.