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A report by researchers from the University of the Free State (UFS) found that the employment trajectory of South Africa’s eight metros has been lacklustre over the past decade. None of the metros experienced appreciable employment growth in manufacturing and tradable services. The three Gauteng metros all lost jobs in manufacturing.

The paper titled ‘Striking disparities in employment across South Africa: Evidence from a new spatial database’ also shows that employment in Cape Town – the top performing city – increased by 20% between 2014 and 2023. This is less than 2% per annum (compound growth) and similar to the city’s population growth rate. Employment in the poorest performing city (Nelson Mandela Bay) declined by 5% over the same period. Johannesburg has been the second-worst performer.

The research by Prof Ivan Turok, who holds the Research Chair in City-Region Economies in the Department of Economics and Finance and the Centre for Development Support at the University of the Free State (UFS), and Prof Justin Visagie, Senior Research Specialist at the Human Sciences Research Council (HSRC) and Associate Professor at UFS, was recently published in the Development Southern Africa journal.

Prof Turok says the study is intended to provide hard evidence on the comparative performance of the country's economic engines in order to inform decision-makers about what needs to be done to reduce unemployment by creating more and better jobs. A more granular understanding of the economy will enable policies to be fine-tuned to different circumstances facing different sectors and places.

It draws on an important new source of spatial economic statistics based on firm-employee tax records. The dataset includes information on firms (at the branch or establishment level) and employment by location for the period 2014-23, including earnings, industry sector, and firm size and export status.

The paper presents six original insights into South Africa’s economic geography emerging from the new dataset.

“The five metros with most jobs are Johannesburg, Cape Town, Tshwane, eThekwini and Ekurhuleni. Together they account for almost 60% of total formal employment in the country. The performance of most of the metros appears to have deteriorated compared to the national average in recent years.

“Six of the eight metros outperformed the national average over the period 2014-2019, compared with only four between 2019 and 2023. The Covid pandemic was a serious setback everywhere and only two of metros have subsequently recovered to their 2020 employment levels. Well-publicised political instability, mismanagement and dysfunction in key metro municipalities have been major problems,” write Profs Turok and Visagie.

Employment growth in the metros

The most consistent source of employment growth across the metros is non-tradable services, stemming from both the government and private sectors. Neither of these broad groups of activity can be considered sources of dynamism that might help to propel economic growth. They are more likely to reflect the needs of the expanding urban population for more consumer services, schools, and healthcare and so on.

Another main source of employment growth is tradable services. Growth is this category has been less widespread than for other services and more focused on Cape Town, followed by modest growth in Johannesburg, Tshwane and eThekwini. Tradable services are more likely than non-tradables to spur generalised growth. Cape Town’s recent employment growth has been more robust and resilient than the other metros, as well as being somewhat faster.

If you look deeper in the data, the biggest sources of employment growth in Cape Town have been retail and wholesale services, followed by administrative activities (call centres, labour brokers and security) and finance and insurance. The main sources of job growth in Johannesburg have been public administration and education, followed by retail and wholesale services, and hospitality. However, the city has lost most jobs in construction and a broad category of ‘other services’.

Employment growth in Tshwane has mirrored the pattern in Johannesburg, but it has lost most jobs in manufacturing and logistics. Ekurhuleni has lost most jobs in manufacturing and construction. eThekwini has created most jobs in retail and wholesale activities. This general shift from tradables to non-tradables suggests that these local economies are not evolving in ways that raise productivity, imply technical progress or reflect positive structural transformation.

Reasons for poor performance

The researchers found that economic opportunities are unequally distributed across different types of settlements with large cities having a more favourable and diversified economic structure than towns and rural areas. They also offer unrivalled opportunities to attract investment and induce employment growth, thereby providing more reliable routes out of poverty for citizens. Each city has distinctive industrial strengths and comparative advantages that could be built upon in the national economic interest.

However, most of the metros have performed poorly over the past decade. It is difficult to imagine the national economy prospering as long as the main cities struggle and stagnate. Some of the reasons for their poor performance have been well documented, with cities being at the sharp end of serious energy and water crises, transport and logistics failures, other forms of infrastructure decay and collapse, accompanied by instability and mismanagement in local government. The deteriorating governance of the metros deserves special attention from national government because of their vital contribution to the country’s economy.

Profs Turok and Visagie say further research is needed to probe more deeply into the nature and causes of these spatial differences, including the variable performance of the metro economies and how their strengths complement each other.