South African consumer landscape

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The 4 key challenges of the South African landscape

  1. Low growth trap

  2. unemployment. 32% of adults are unemployed. 380 daily increase in youth unemployment. NEET (not in employment education or training). There are more NEETs under 35 in SA then the entire female workforce.

  3. Education deficits

  4. skills deficit


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What does it mean that SA is a dual economy?

A dual economy means that SA has 2 different but connected economic sectors. Namely the first(formal economy) and second economy(informal economy).

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First economy (Formal economy)

The formal economy is sophisticated and dominated by large corporations and established businesses.

Examples:

  • Banks and financial institutions.

  • Large retail chains.

  • Major corporations.

  • Formal employment.

People working in this sector are typically more skilled and financially better off.

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Second economy (Informal economy)

The second economy is dominated by the informal sector.

Examples:

  • Spaza shops.

  • Street hawkers.

  • Small informal traders.

  • Informal businesses.

This sector includes many people with lower incomes, lower skill levels and fewer economic opportunities. The textbook also notes that the informal sector employs more people than mining.

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First economy (insiders)

This includes the formal sector workers and self employed

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Second economy (outsiders)

This includes unemployed and not economically active individuals, searching and unemployed, informal sector & self employed.

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How economies interact with each other?

First economy core is the more established, sophisticated part of the formal economy, dominated by large corporations and highly skilled workers. The first economy periphery is the part surrounding the core, which is still connected to the formal economy but is closer to the lower-skilled, lower income side of the economic system. The second economy supplies low cost labor to the first economy. The first economy supplies products and services to the second economy. Grants and welfare flow towards the second economy.

<p>First economy core is the more established, sophisticated part of the formal economy, dominated by large corporations and highly skilled workers. The first economy periphery is the part surrounding the core, which is still connected to the formal economy but is closer to the lower-skilled, lower income side of the economic system. The second economy supplies low cost labor to the first economy. The first economy supplies products and services to the second economy. Grants and welfare flow towards the second economy. </p>
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