NATIONAL

SENIOR CERTIFICATE

GRADE 12

WINTER CLASSES 2025

TOPIC 11 :Economic & Social indicators

This material consists of 13 pages.

 TOPIC 11: ECONOMIC AND SOCIAL INDICATORS SUBTOPICS

11.1 Assessing the performance of the economy

11.2 Economic indicators

11.3 Social indicators

11.4 International comparisons

11.1 ASSESSING THE PERFORMANCE OF AN ECONOMY

11.1 IMPORTANCE OF MEASURING THE PERFORMANCE OF AN ECONOMY

 To determine suitable changes in economic policies that need to be implemented as the economy is
dynamic
 To measure the effectiveness of economic policies that were implemented to improve the
performance of the economy
 To compare the performance of the country with its peer countries
 To determine the contributions of different sectors to the economy
 To provide information about the economic conditions to potential investors
 11.2 ECONOMIC INDICATORS (Discuss in detail)

Economic indicators

There are two key inflation indicators:

a) Producer price index (PPI)

• PPI is used to measure changes in the prices of goods produced locally
when they leave the factory floor and imported goods when they enter the
country
• The indicator consists of a basket of local, exported and imported goods.
• The index measures the cost of production and it serves as an indicator
to predict consumer inflation (CPI).
Basket consists of manufactured goods as well as capital and intermediate
goods
 PPI excludes value added tax (VAT) and interest rates
 Prices of imported goods are measured when they enter the country (at a
port)

b) Consumer price index (CPI):

• CPI is the weighted average of the prices of a general basket of goods and
services likely
to be bought by consumers.
• Weights are obtained from the expenditure of households and show
changes in the
purchasing power of the rand.
• CPI is the official index used in inflation targeting.
• The index measures the cost of living and it is used by labour unions to
negotiate for
wage increases.
Capital and intermediate goods are excluded from the basket of consumer
goods and services
 CPI includes value added tax (VAT) and interest rates
 Prices of imported goods are not explicitly shown

Foreign trade indicators

a) Terms of trade:
 Terms of trade (ToT) is the ratio of export price index to import price index.
 A deterioration in the terms of trade is caused by an increase in import prices
and a decrease in export prices.
 A greater volume of exports may need to be produced to maintain export
earnings, if the terms of trade decline.
 An improvement in the terms of trade is caused by a decrease in import prices
and an increase in export prices.
 The economy will spend less for the same amount of imports if the terms of
trade increase.
 Changes in the terms of trade serve as an indicator of changes that may cause
spill over effects into the Balance of Payments and the local currency may
appreciate or depreciate.

b) Exchange rate
 Exchange rate refers to the value of a country’s currency in terms of another
currency.
 Exchange rates between countries differ, in other words, while the rand may
depreciate against the US dollar, it may appreciate against the Chinese yuan.
 Changes in an exchange rate affect the prices for imports and export earnings.
 Depreciation of the rand against the dollar will result in US goods and services
becoming more expensive in South Africa.
 Appreciation of the rand against the US dollar will make South African exports to the
US more expensive thereby reducing demand.

Employment indicators
a) The economically active population (EAP)/Labour force
 Economically Active Population refers to the labour force between
15 – 65 years of age.
 EAP includes workers in the formal sector, informal sector,
employers, self-employed persons and unemployed persons.
b) Employment rate
 Employment rate is the number of employed persons expressed
as a percentage of the economically active population (EAP). .
 High level of employment is an indicator of a strong economy
with high levels of growth and development.
 Employment indicators are used to calculate the trends in
different economic sectors or industries, productivity and
success of the economy in utilising its full potential.
c) Unemployment rate
 Unemployment rate is the number of unemployed people (who
are actively looking for work) expressed as a percentage of the
economically active population.
 Statistics South Africa obtains labour data from the Quarterly
Labour Force Surveys to calculate unemployment.
 In South Africa the official unemployment rate of above 30% is a
major cause of poverty
Productivity indicators
a) Labour productivity
 Labour productivity is measured by dividing the real GDP by the number of workers
employed.
 In South Africa labour productivity increases at a lower rate than the increase in labour
remuneration
b) Remuneration per worker
 When productivity increases are lower than the real wage increases, inflationary
pressures will occur.
 The relationship between productivity and wages is crucial for employers and workers
and they are therefore important indicators.
Interest rates
 Interest rate is the cost of borrowing money as well as returns of capital invested.
 Repo rate is the main factor used to measure interest rates.
 Repo rate is the rate at which the South African Reserve Bank (SARB) lends money to
commercial banks.
 An increase in interest rates means that households and businesses will pay higher
repayment instalments on their debts.
 Higher interest rates signal a downturn in business cycles and some workers may lose their
jobs and incomes fall.

Money supply
Money supply is classified into the following three categories.
a) M1: it consists of bank notes and coins in circulation and demand deposits of the domestic
private sector at banks.
b) M2:it consists of M1 plus other short term and medium-term deposits of the domestic
private sector at banks.
c) M3:it consists of M2 plus long-term deposits of the domestic private sector at banks.

Activity
  Identify the percentage change in South Africa's labour productivity in the fourth
quarter of 2022. (1)
 State ONE other economic indicator that relates to productivity. (1)
 Briefly describe the term economic indicator. (2)
 Explain the impact of an increase in labour productivity on the economy
 How can the government improve the productivity of the South African labour
force?

How can changes in CPI affect the economy? (8)

SOCIAL INDICATORS (DISCUSS IN DETAIL)

Demographic Indicators
-This deals with the characteristics of the population, such as size, race, age, gender, income
geographic distribution, language, education, occupation and religion
-These are definable issues related to human well-being over a period of time
-The size of the population is important for infrastructure and social programmes

Population: Estimated at 63.02 million (mid-2024)

Population Growth: Average annual growth rate of 1.8% since 2011

-Measuring population growth is important for delivering social services and for identifying the size of
the tax base (the total number of people paying taxes)
- Understanding population growth is important for predicting, managing, monitoring, and eradicating
pest and disease outbreaks
-Population growth usually has implications for indicators related to education, infrastructure and
employment
-Human settlements and the use of natural resources are also related to population growth

Life expectancy
-refers to the number of years a person can expect to live
-Life expectancy is based on an estimate of the average age that members of a particular population
group will be when they die
-South Africa’s life expectancy is around 62 years for males and 68 years for females (2022 estimates)
-It is a measure that is often used to determine the overall health of a community
-Changes in life expectancy are often used to describe trends in mortality
-An increase in life expectancy may increase the productivity of available human resources,e.g., by
improving health of workers
-Life expectancy for a particular population group depends on factors such as their lifestyle, access to
healthcare, diet and economic status

Nutrition and Health Indicators

Nutrition
Malnutrition: Affects approximately 27% of children under 5 years, indicating chronic undernutrition
Obesity: Rising concern, especially among women; over 40% of adult women are classified as
obese
Health
Infant mortality/Child Mortality: Infant mortality refers to the number of children who die before the
age of one year and it is one way of measuring the health of a population
The infant mortality rate is the number of infant deaths for every 1 000 live births estimated at 28
deaths per 1,000 live births in South Africa
Under-5 Mortality: the number of children that will die before the age of 5 years
Around 34 deaths per 1,000 live births, with efforts underway to meet the SDG target of reducing
this to 25 per 1,000 by 2030
Spending on health: Public health expenditure is approximately 8.5% of GDP, supporting hospitals,
clinics, and health programs.
Access to clean water: measures the percentage of a population that has reasonable access to
safe drinking water
-About 73.4% of households have piped water inside the yard in SA
-South Africa is expected to experience a water deficit of 17% by 2030, and climate change may
worsen the situation
Access to sanitation: measures the percentage of a population with at least adequate sanitation
facilities that can prevent human, animal and insect contact
-Around 66% of households have access to improved sanitation facilities
-Poor sanitation causes economic losses associated with the direct costs of treating illnesses and
lost income through reduced productivity

Education
Public sector spending on education: estimated around 20% of total government expenditure.
Secondary School Enrolment: Around 85% of eligible learners are enrolled in secondary education.
Primary school completion rate: South Africa has made significant progress toward universal access
to primary education.
-The completion rate for primary education is estimated at over 90%, indicating that most children
are completing the full cycle of primary schooling
Youth literacy rate: The youth literacy rate (ages 15–24) in South Africa is estimated at 98%,
reflecting strong progress in basic education and literacy initiatives
-Literacy not only enriches an individual's life, but it creates opportunities for people to develop skills
that will help them provide for themselves
-Literacy improves the ability of individuals to access information

Services

Electricity Access: 84.7% of households

use electricity for lighting
Refuse/Garbage Removal:
About 64% of households receive regular
refuse removal services.
Water Supply: 73.4% have access to
piped water inside the yard
Sanitation: 66% have access to
improved sanitation
 Housing and Urbanisation
Number of Houses Completed: Over 4.7 million government-subsidised houses built since 1994.
Urbanisation: Driven by natural population growth and migration from rural to urban areas.
Founding of new towns: New urban developments are ongoing, especially in Gauteng and Western Cape,
though formal new towns are rare.

Activity

 Give any TWO examples of basic services provided by the government (2)
 Why is access to healthcare services important to the labour force? (2)
INTERNATIONAL STANDARDISATION

 Countries use the IMF, World Bank, and UN to standardise indicators

because these institutions provide internationally recognised
frameworks with credibility of national data.
 Standardised indicators allow countries to compare their performance
with others, which is essential for global benchmarking and policy
evaluation.
 By aligning with these institutions, countries gain access to financial
resources, technical assistance, and development support that often
require adherence to specific data standards.
 These organisations offer expertise and capacity-building programs that
help countries improve the quality and reliability of their statistical
systems.
 Participation in global initiatives such as the Sustainable Development
Goals requires countries to report using standardised indicators,
ensuring accountability.
 Standardisation also supports economic planning, budgeting, and the
implementation of reforms by providing a clear picture of national
performance across sectors.