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South Africa has faced consistently elevated unemployment levels despite numerous macroeconomic reforms, prompting worries regarding the effectiveness of key economic indicators in promoting labour absorption. This study analyses the influence of economic growth (GDP), inflation (CPI), and foreign direct investment (FDI) on unemployment in South Africa, employing quarterly data from the first quarter of 2010 to the fourth quarter of 2023. The analysis utilises a quantitative design, implementing the Augmented Dickey-Fuller unit root test, the Johansen cointegration method, and a Vector Error Correction Model to evaluate the long- and short-term dynamics among the variables. The findings indicate that all variables are integrated of order one and possess a long-term equilibrium connection. Long-term estimates demonstrate substantial negative correlations, suggesting that increased GDP, CPI, and FDI are associated with a decrease in unemployment over time. In the near term, GDP elevates unemployment, indicating the prevalence of capital-intensive growth, whereas FDI persistently reduces unemployment and CPI remains negligible. These findings underscore the structural characteristics of unemployment in South Africa and the constraints of macroeconomic factors in facilitating short-term labour absorption. The report emphasises the significance of policies that promote labour-absorbing growth, improve the investment environment, and prioritise skills development to tackle ongoing unemployment.The report advocates for prioritising labour-intensive growth methods, enhancing the investment environment, and fortifying skills development systems to improve employment outcomes. These initiatives are essential for tackling persistent unemployment and fostering inclusive and sustainable economic growth.

This study examines the correlation between unemployment and economic growth in South Africa through a disaggregated analysis focused on educational attainment. Grounded in the Solow growth model and human capital theory, the research utilises annual time-series data from 1994 to 2022, obtained from the World Bank Indicators. Economic growth is represented by GDP growth, labour is indicated by unemployment rates categorised by advanced, intermediate, and basic education levels, and capital is measured by gross fixed capital creation. The Autoregressive Distributed Lag (ARDL) framework is utilised after conducting unit root and bounds tests, which validate the existence of long-run cointegration. The findings reveal a negative and statistically significant long-term association between economic growth and unemployment for those with basic and intermediate education, but unemployment among those with advanced education shows a negative but minor influence. Investment consistently demonstrates a favourable and substantial effect on growth. The findings emphasise structural unemployment and skills mismatches, highlighting the necessity for enhanced alignment between educational systems and labour market requirements to foster inclusive and sustainable economic growth in South Africa.