the theme of “ repairing the social and economic fabric ”. in recognition of the scale of the employment crisis and its impact on both social cohesion and longer term growth, several other global institutions and economists are focusing their attention on employment, seeking ways to tackle unemployment and underemployment. these discussions on employment occur in a global context where unemployment has increased sharply since the onset of the financial crisis. of great concern is the fact that the number of young people who are unemployed, and the length of time that people remain unemployed, are rising. south africa has had an unemployment crisis for the better part of three decades. a few years ago south africa was an outlier with an unemployment rate of around 25 percent. today there are several countries in the periphery of europe with unemployment rates at least as high as ours – not that this is any reason for complacency or comfort. the international labour organisation estimates that there are about 200 million unemployed people in the world today. this figure excludes the millions more who are either underemployed or are discouraged from seeking employment. the ilo estimates that the number of unemployed people in advanced economies is likely to remain above the precrisis level up to at least 2017, a full decade after the crisis first began. in south africa, total employment is still about 400 000 below the peak reached in in 2008. bis central bankers ’ speeches the unemployment crisis represents a massive waste of lives and resources. it has profound social implications and its effects will be with us for decades to come. economists refer to the term hysteresis, which in this context describes the loss of skills and productivity when a person has been out of the workforce for a long period of time, thereby lowering future potential growth. reducing unemployment on a sustainable basis is arguably the single most important economic objective at the present moment. in part, creating jobs is about raising the level of economic growth. however, it is also about addressing the structural factors that limit employment growth. my address today will try to give you a sense of how central banks think about employment and how they factor employment issues into their reaction function. i will also explore broader structural and cyclical factors relating to employment. before concluding, i will briefly make some observations about the future of work and the likely impact of technological change. the policies of central banks are not often associated directly with employment creation. however, monetary and financial sector policies have a role to play in at least two respects. firstly, the

gill marcus : employment and the economics of job creation speech by ms gill marcus, governor of the south african reserve bank, at the 26th annual labour law conference, south african reserve bank, pretoria, 31 july 2013. * * * dr erich fromm, in his 1976 book “ to have or to be? ” provides an analysis of the crisis of modern civilisation and, when addressing the features of a new society, wrote : “ the first requirement in the possible creation of the new society is to be aware of the almost insurmountable difficulties that such an attempt must face … those who have not given up hope can succeed only if they are hard - headed realists, shed all illusions and fully appreciate the difficulties … ( the new society ) would have to create work conditions and a general spirit in which not material gain but other, psychic satisfactions are effective motivations … ” akerlof and shiller, in their book “ animal spirits ” ( 2009 ) write : “ we are facing the same problem today that we faced in the latter years of the great depression – business today is inhibited by uncertainty about the future, about the tolerance of an angry public, about a disaffected labour force and about what further government actions may be coming … we identified five psychological factors that we thought were of particular importance. they are confidence, fairness, corruption and bad faith, money illusion and stories … ” it is almost twenty years into our young democracy, the past six of which have been seriously impacted by a global financial crisis to which there is no end in sight. and one of the hardest hitting impacts has been on ordinary people from all walks of life, who have seen their hopes for the future evaporate ; millions will never work again ; others will never know the dignity and independence that work brings. as the above quotes reflect, creating an inclusive society requires courage, foresight and the ability to make very tough choices. we also better understand our circumstances and challenges through stories, and it is imperative that we both tell and hear the many varied south african stories that make up the complex fabric of our society. each year, the world bank publishes its world development report covering a particular theme of development. this year, it has titled its report “ jobs ”. this simple title says much about the most pressing economic issue facing the world today. the imf, too, has released a substantive paper on employment and growth and recently the international labour organisation released its world of work report with