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This is South Africa’s jobs outlook for the rest of the year

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Results of the third Quarter Labour Force Survey (QLFS) published by Stats SA has put South Africa’s unemployment rate at 30.8% – 43.1% on the expanded definition, which includes discouraged work seekers who have given up looking for jobs.

This is the highest recorded since 2008, the Institute of Race Relations pointed out in a research note on Friday (13 November).

Put differently, the figures show that only 51.5% of South Africans between 35 and 64 have a job, and only 57% between 15 and 34 are employed or are in education or training, the IRR said.

Only two in every five South Africans between 25 and 34 are employed.

“Years of policy failure, compounded by the lockdown restrictions of recent months, have left South Africa facing a humanitarian crisis of steadily rising unemployment,” the IRR said.

It said that while the lockdown imposed to curb the spread of Covid-19 earlier this year delivered a body blow to the economy at a cost of millions of jobs, joblessness in the country has been rising steadily since 2009.

In that year, 1.7 million people were classified as ‘new entrants’ – people who were unemployed during the reference period and had never worked before. A decade later, there were 2.5 million in this category.

In 2009, the number of people who were declared unemployed due to losing a job (by being laid off, or because a business was sold or closed down) was 1.5 million.

In 2019, this figure had grown to more than two million.

Overall, joblessness has risen from 4.3 million in the third quarter of 2009 to 6.5 million, the IRR said.

Slower recovery

Peter Attard Montalto, head of Capital Markets Research at Intellidex, noted that while the official unemployment rate bounced back as expected, the broad stress is still there looking through adjusted data. Unemployment (adjusted) is still some 1.85 million higher than in the first quarter, he said.

The analyst said that the unemployment data is important for tracking the underlying nature of the recovery and stresses in the economy. He said that a jump back of 543,000 in employment was a 3.8% quarter on quarter rise after a 2.23 million drop in the second quarter.

“This was a little less than expected indicating perhaps at this early stage the lower labour intensity of the recovery,” Attard Montalto said.

By including formally included discouraged workers, an adjusted total of unemployed climbed to 10.0 million in the first quarter, from 9.6 million in the last quarter of last year, rising to 12.3 million in Q2 and dropping back to 11.8 million in the quarter under review.

This gives the true sense of the underlying unemployment problem in South Africa, Intellidex said.

The wide definition of unemployment rose from 37.9% in the first quarter, to 46.5% in the second, and then has fallen back slightly to 44.6%.

Overall, by this broad adjusted definition this crises has caused 2.3 million jobs to be lost in the second quarter versus the first, and now there are 1.8 million lost in the third quarter versus the first, Attard Montalto said.

This, the analyst said, is roughly around expectations, “and we expect this to fall to around 1.5 million by year end“.

New approach needed

Nearly three out of four South Africans (74.1%) aged 15-24 who were available to work were unemployed, with half of those aged 25-34 being without a job, noted Lullu Krugel, chief economist for PwC Strategy&; Africa, and PwC economist, Dr Christie Viljoen.

“By any measure these are stark numbers and partly explains why, in September 2020, South Africa experienced the most politically related protest events since the appointment of President Cyril Ramaphosa in early 2018,” PwC said.

On an industry level, eight of the major sectors tracked by Stats SA recovered jobs during the third quarter, with utilities (water and electricity) and transport the only areas where employment continued to decline after the losses seen in Q2.

At the same time, many South Africans were still receiving less remuneration compared to the pre-pandemic period.

Stats SA data indicates that one in five workers with an education up to and including matric received reduced pay during the third quarter.

PwC expects an additional 250,000 jobs to be recovered in the fourth quarter. Many of these will be seen in the tourism and hospitality sectors, it said.

President Ramaphosa said earlier this week that the government is “working to enable all parts of the economy to return to full operation as quickly
and as safely as possible”. This includes reopening international travel to all countries, subject to the necessary health protocols.

South Africans are also increasingly travelling to local destinations: income earned from hotel accommodation increased from R177 million in July to R365 in August, with the latest number being around 10 times higher compared to May, PwC said.

Despite this expected increase in jobs during the fourth quarter, it still implies a net loss of 1.4 million employment opportunities by year-end, PwC said. “This will compound the existing challenges seen prior to the pandemic in creating enough value-adding jobs in South Africa.

PwC recently commented that South Africa’s key challenges – unemployment and inequality – have now become considerably more severe through
the pandemic and can no longer be approached in the traditional way. “An entirely new approach by the government is needed to resolve this issue,” said Krugel.

Other projections

Nedbank forecasts that around 500,000 jobs will be lost in South Africa this year, with the country’s labour market only set to reach the pre-crisis peak in the second half of 2023.

In July, a team of South African researchers have published the National Income Dynamics Coronavirus Rapid Mobile Survey (NIDS-CRAM) which looks at the economic impact of the coronavirus pandemic, and countrywide lockdown.

The study surveyed 7,000 South Africans and can be considered the most nationally representative survey that currently exists, the researchers said.

The key finding was that approximately three million people lost their jobs over the lockdown period, representing an 18% decline in employment from 17 million people employed in February, to 14 million people employed in April 2020.

Accounting for a 95% confidence interval, the decline in the number of people employed from February to April was likely between 2.5 million and 3.6 million, the researchers said.

Source: BusinessTech


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