South Africa’s official jobless rate surprisingly dropped to 34.5% in the first three months of 2022, from 35.3% in the last quarter of 2021.
Stats SA released its quarterly labour force survey (QLFS) on Tuesday, which revealed that the number of those unemployed in the country dropped by 60 000 to 7.9 million in the first quarter of the year.
This translates to 370 000 jobs created between the last quarter of 2021 and the first quarter of 2022, signalling that employers were starting to respond to the country’s economic recovery.
Lulu Krugel, chief economist at PwC, said:
“The good news from what we’re seeing now is that, at least in the first quarter, the job markets improved. But the question is whether this will continue for the remainder of the year. The reality is that there’s a lot of external factors weighing on growth now, which is negative for job creation.”
The QLFS showed that the number of employed people increased in six of the 10 sectors, with the largest gains recorded in community and social services, manufacturing and trade sectors.
A total 281 000 jobs were created in the community and social services sector. Manufacturing and trade gained 263 000 and 98 000 jobs, respectively.
While households that were already under pressure early in the year shed 186 000 jobs, further jobs were lost in the finance sector. Construction shed 60 000 jobs and 23 000 more were lost agriculture as the season wound down.
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The number of discouraged work seekers dropped by 54 000, bringing the expanded unemployment rate down to 45.5% from 46.2% of the labour force. The number of those not economically active for reasons other than discouragement also went down by 112 000, resulting in a net decrease of 166 000 not economically active people.
Said Don Consultancy Group chief economist Chifi Mhango: “Although the South African government has drafted various policies to try and create a conducive environment to drive investment and job creation, the QLFS data clearly show that the dream to reducing unemployment rate drastically is yet to be realised.”
Unemployment remained high levels (63.9%) among those aged 15 to 24, and at 42.1% for the 25- to 34-year-olds. Meanwhile, 3.8 million out of 10.2 million people aged 15 to 24 year were not in employment, education or training (Neet), increasing the overall Neet rate by 4.6 percentage points in the past year.
Mhango added: “South Africa’s unemployment rate was concerning for social, economic and political stability, as it also ranked among one of the highest in the world. The unemployment rate does not just impact those individuals who are jobless, as the level and persistence of the factors of unemployment have wide-ranging impacts across the broader economy. It also erodes the purchasing or personal consumption levels, which is a key factor in attracting of consumer-driven investments.”
Unemployment levels were highest in the Eastern Cape, Mpumalanga, Limpopo and KwaZulu-Natal, where expanded unemployment rates above 50% were recorded.
Independent economist Duma Gqubule said the situation was dire.
“It’s only a matter of time before we have a permanent flare-up of political and social instability over the next years.”
Krugel agreed that social unrest remained a risk.
“The social cohesion, the growing gap between rich and poor, unemployment ... all these are things that drive dry wood. We need to be realise that we need to be responsible as South African business as well, and if we stick our heads in the sand that this is not an issue, it would be wrong of us.
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“I sincerely hope that we’re able to avoid a situation to the extent that we saw last year [the July 2021 civil unrest], but the bottom line is people are frustrated.”
Economists agree that South Africa’s high levels of unemployment needs to be addressed urgently.