vertical at a low rate of positive economic growth. 6 this is strong evidence that the basic job creation mechanism is being impeded by things other than aggregate demand. this adverse relationship between policy expansion and inflation kicks in when employment levels rise above what is called the non - accelerating inflation rate of unemployment, or nairu. evidence for south africa shows that this happens when our unemployment rate is still very high. this is exacerbated by level changes in the nairu caused by structural impediments to job creation. for instance, load - shedding or higher transport costs indirectly increase the cost of creating jobs and push up the nairu. 7 a range of long - standing factors contribute to our very high nairu. perhaps the most important of these is where people live and the cost of supplying their labour, and the skills they have compared to their cost. 8 regulatory costs of our economy also feature in various ways, including housing, where businesses can ply their trade, and compliance − which is a much larger burden for small and medium - sized businesses compared to that of larger firms. 9 part of the difficulty is that we have done little to make it easier for less - skilled workers to find jobs, or to make it less costly to employ them. 10 6 when vertical, any expansion in demand is constrained by supply – prices rise but not volumes and not volumes of jobs. 7 one older estimate of the nairu put it at about 25 %. a kabundi, e schaling and m some, ‘ estimating a time - varying phillips curve for south africa ’, south african reserve bank working paper 16 ( 05 ), may 2016. 8 m leibbrandt and p green, ‘ redi3x3 conference : policies for inclusive growth ’, february 2017. http : / / www. econ3x3. org / sites / default / files / articles / leibbrandt % 20 % 26 % 20green % 202017 % 20redi % 20conference % 20on % 20inclusive % 20growth % 20final _ 0. pdf 9 j r magruder, ‘ high unemployment yet few small firms : the role of centralised bargaining in south africa ’, american economic journal : applied economics 4 ( 3 ), july 2012. 10 d faulkner, c loewald and k makrelov, ‘ achieving higher growth and employment : policy options for south africa ’, ersa working paper 334, 2013 ;

the united states ( us ), employment levels. but it is highly unlikely that emerging market economies will decide to change their policy frameworks. many had reverted to much higher inflation even before the pandemic eased, while others, like south africa, are now caught up in broader inflation. in that more normal context, the standard monetary policy approaches make as much of a positive impact on economic growth and jobs as they can. however, the real solutions to faster growth and job creation lie in other policy domains. why the difference between advanced and emerging economies? why might the rules governing objectives differ somewhat? the answer has to do with pure economic theory, actual experience, and with the different economic conditions − cyclical and structural − faced by different central banks. to begin, it should be clear that for quite some time, essentially since the early 2000s, central banks of advanced economies have faced stubbornly low inflation, despite low interest rates, for a range of structural reasons related primarily to demographics and high savings. so, when they took an accommodative stance to raise growth and employment levels during the great moderation of the 2000s and the period into the pandemic, inflation still remained modest. as the pandemic hit, because inflation remained low, there was as yet no contradiction between the inflation targets and boosting growth. policy expansion could help get people who had dropped out of the labour market back in. job creation was efficient. expansionary stances worked well with strategies that lowered the cost to firms of retaining people in jobs. in south africa ’ s case, the pandemic also facilitated expansionary policy, precisely because inflation had trended lower from 2017. this allowed us to lower policy rates sharply in 2020 to confront the shorter - term damage done to the economy. the repurchase ( repo ) rate averaged 6. 7 % between 2017 and early 2020, before dropping to 3. 5 % in march / april of that year. a deeper dive into jobs and growth targets as in advanced economies, our expansion did little to immediately bring back jobs. many were lost as lockdowns were extended, while some new ones were created in various services linked to the shift in consumption patterns. expansion did support the recovery of both pre - pandemic spending patterns and many of the jobs associated with them. of course, there is also much further to go, as some sectors remain constrained. the open question is whether sustained expansion in an environment of high debt levels and rising