South Africa’s stubbornly high unemployment rate, which was at 32.9% in the first quarter of 2025, is threatening the resilience and growth of the country’s smaller enterprises.
According to Stats SA, youth unemployment remains alarmingly high at 46.1%, raising fresh concerns about South Africa’s future workforce and economic stability.
“These numbers are not just statistics. They reflect growing desperation, especially among young people,” said Lesedi Mpoko, founder of AXG, a business development and communications advisory firm.
Mpoko started AXG to help small businesses grow their client base and improve their visibility in the market. However, as a start-up, AXG has had to make tough decisions to stay afloat in an economy with limited opportunities and shrinking spending power.
“We are in a growth phase, but we operate with caution. We’re cutting costs by working from home, using client offices and paying ourselves very little. It’s not ideal, but it’s necessary,” Mpoko said.
Although his goal was to run a lean solo business, the country’s high unemployment rate motivated him to hire a job-seeking graduate and build partnerships to grow AXG, with hopes of extending the model to other businesses.
“If funding weren’t a problem, I would hire more people,” he said. “Unemployment shaped our partnership strategy; we brought on experienced advisors to help scale and eventually create more jobs.”
Realeboga Mahapa, an economist at North-West University, said the challenges go beyond joblessness.
“Despite increased education spending growing from R28 billion in 1994 to R397 billion in 2021, youth unemployment remains high. That is because of structural mismatches between graduate skills and the needs of the labour market,” Mahapa explained.
She added that slow economic growth and poor alignment between education and job opportunities were compounding the problem.
Many graduates are left underprepared for industries like technology and services that could otherwise absorb new workers.
Start-ups and small businesses, once hailed as job-creation engines, are now slowing hiring due to financial strain.
“I wish we could hire an operations officer, but we simply don’t have the money,” said Mpoko.
“Without solid systems and staff, it’s harder to grow our financial challenges directly impact operations.”
