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Policy Brief 8 - The Effects of Municipal Spending on Urban Employment

South Africa has one of the highest unemployment rates in the world. Unemployment has remained above 20% since the dawn of democracy in 1994. Despite the widespread perception that unemployment levels are generally lower in urban centres, compared with the rest of the country, the reality is that urban municipalities also face unemployment levels that are almost as high as the national average. Research by the Financial and Fiscal Commission, which examined the indirect effects of municipal spending programmes on job creation, found that spending on job creation and poverty alleviation initiatives contribute positively towards employment. In particular, spending on the Expanded Public Works Programme (EPWP) and the Community Work Programme (CWP) has a significant positive effect on the total level of employment for metros, but not for other urban municipalities, namely secondary cities and large towns.

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