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UNEMPLOYMENT RATE RISES TO 32.9% AS MORE PEOPLE ENTER THE JOB MARKET

Darren Parker | 16 May 2023


Statistics South Africa (Stats SA) has revealed that the official unemployment rate has increased by 0.2 percentage points, from 32.7% in the fourth quarter of 2022 to 32.9% in the first quarter of this year.


“We are not creating sufficient employment,” statistician-general Risenga Maluleke said on May 16 at the release of the Quarterly Labour Force Survey (QLFS) for the first quarter, noting a total growth in employment of 8.6%, down from the 10.4% and 9.6% in the third and fourth quarters of last year respectively.


The QLFS showed that the overall number of employed persons in South Africa had increased by 258 000 quarter-on-quarter from 15.9-million to 16.2-million.


However, the number of unemployed individuals also increased from 7.8-million to 7.9-million.


The overall unemployment rate was adversely impacted by more individuals attempting to enter the workforce, leading to a decrease in non-economically active discouraged work seekers, from 3.4-million to 3.3-million, while other non-economically active individuals also decreased by 209 000 from 13.4-million to 13.2-million.


Both the formal and informal sectors recorded increases in employment of 209 000 and 107 000, respectively.


Despite the rise in the unemployment rate, financial institution Nedbank commented that the continued increase in employment was comforting.


In its analysis of the QLFS, the bank said that other high-frequency data out so far suggests a modest improvement in the first quarter compared with the final quarter of last year, implying that the economy will probably avoid a technical recession.


Despite the rise in the unemployment rate, the continued increase in employment is comforting. Other high-frequency data out so far suggests a modest improvement in the first quarter compared with the final quarter of last year, implying that the economy will probably avoid a technical recession.


However, Nedbank believed that the outlook for the rest of the year remained bleak as the economy faced significant headwinds, which would hamper the job market.


“Slower demand in most major economies, hurt by the high cost of living, will exert downward pressure on commodity prices and weigh on export-orientated industries such as mining and manufacturing. Unfortunately, those two industries are also power intensive and will therefore suffer the most pain from the electricity crisis,” Nedbank said.

Other industries are also facing hardship ahead, thanks to ongoing intensive load-shedding. Nedbank believed that higher interest rates and fragile consumer confidence would contain consumer spending and hurt corporate profits.


“While the government is accelerating efforts to deal with issues at Eskom, it will take years to resolve this challenge completely. Therefore, the cost of doing business will remain high,” the bank said.


The finance sector is one of the sectors hurting the least, having recorded the largest employment gains, adding 184 000 jobs over the last quarter. However, as at the fourth quarter of last year, the finance sector only makes up 15.6% of the country’s total employment, despite it representing 23.9% of nominal gross domestic product (GDP).

The community and social services sector added 175 000 jobs during the first quarter, while the agriculture sector added 27 000.


Meanwhile, employment losses were recorded in the private households, trade, mining, construction and manufacturing sectors. Private household employment went down by 85 000 jobs, trade by 28 000, mining by 24 000, construction by 11 000 and manufacturing by 2 000.


As at the fourth quarter of last year, a 20.7% share of the country’s employment figures were represented by the trade sector, against its 14.3% share of GDP. The construction sector also employed more than its fair share, representing 7.6% of the employed workforce against only 2.4% of GDP. A similarly unsustainable circumstance was seen in the agriculture sector, which employed 5.4% of the total employed individuals in the country for only 1.5% contribution to GDP.


Private households employed the most when contrasted against GDP, representing 7.5% of employed individuals against virtually no contribution to GDP.


Nedbank believed that the pace of implementation of measures to resolve the various key impediments to economic growth has been slow. These include measures to curb corruption, reduce skills shortages, overcome policy challenges, and refurbish deteriorating logistical networks.


“Under these circumstances, business confidence will remain depressed, and the private sector will most likely limit investment spending and employment growth,” the bank said.

It added that employment by the government would also be limited by the fiscal consolidation path, which, among other key objectives, prioritises the reduction of the wage bill.


In Gauteng, employment figures went up by 80 000 – the largest increase among the provinces. Limpopo's employment figures went up by 71 000, with the Western Cape up by 62 000, KwaZulu-Natal up by 54 000 and the Eastern Cape up by 41 000 quarter-on-quarter.


In Mpumalanga, however, employment losses of 45 000 were recorded, with the North West and Free State recording 4 000 job losses each.


The youth, between the ages of 15 and 34 years old, remain the most vulnerable demographic in the labour market, with the QLFS showing that the total number of unemployed youth increased by 241 000 to 4.9-million. Only 28 000 new jobs were filled by this section of the economy, taking the total number of employed youths to 5.6-million.


The consequence of these figures is an increase in the youth unemployment rate of 1.1 percentage points to 46.5% for the first quarter.


"The number of unemployed and discouraged work seekers who can enter the job market remains high, so even if employment were to increase, the unemployment rate is likely to remain structurally high over the medium term," Nedbank said.


‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.




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