Unemployment at record 30.8% as SA now has 6.5 million jobless

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South Africa's jobless has increased to 6.5 million, according to data from Statistics South Africa (Stats SA).

Stats SA on Thursday released the quarterly labour force survey for the third quarter of the year - it shows the official unemployment rate increased to a record 30.8%.

"Unemployment increased substantially by 2.2 million to 6.5 million compared to quarter 2 of 2020 resulting in an increase of 2.8 million (up by 15.1%) in the number of people in the labour force," Stats SA said.

The expanded unemployment rate increased by 1.1 percentage points to 43.1% in the third quarter.

Economists had anticipated a surge in unemployment figures. 

During the quarter more businesses were allowed to operate as the economy slowly reopened, which meant more people could re-enter the labour force and look for jobs. Stats SA noted that the labour force participation was higher in the third quarter than the second quarter.

According to the data – the largest employment increases were observed in the formal sector (up 242 000), followed by the informal sector (up 176 000), private households (up 116 000) and the agricultural sector (up 9 000).

"Compared to a year ago, total employment decreased by 1.7 million," Stats SA said.

Stats SA came under fire upon the release of the second quarter results, as the official rate registered an improvement of 23.3% from 30.1% reported previously. During the quarter lockdown restrictions were at their harshest, with economic activity reduced to essential services only. According to Stats SA, the sample used for second quarter data was smaller than usual. Due to the lockdown, people were unable to look for jobs and they were not categorised as active in the labour force, which also impacted the calculation of the official unemployment rate. Economists had advised that the expanded unemployment rate of 42% was more realistic to go by.

Bureau of Economic Research senior economist Lisette IJssel de Schepper said the third quarter unemployment stats would be one of the first indicators of the "permanent damage" to the economy and labour market due to lockdown, Fin24 previously reported.

It could still take a number of years for employment to return to pre-lockdown levels, said IJssel de Schepper. Economists expect unemployment to worsen in the coming quarters. Economist Mike Schüssler sees unemployment peaking at around 40% in the first quarter of next year.

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