SA’s unemployment is showing no sign of abating, with the jobless rate climbing to a new record despite a sharp rebound in economic activity in 2021 after the easing of Covid-19 lockdown restrictions.
Coming just a few days after President Cyril Ramaphosa hosted an investment conference in which he was able to say he was within touching distance of a R1.2-trillion target announced four years ago, Stats SA data on Tuesday gave a dose of realism, highlighting the need for the government to deal with constraints such as Eskom power cuts and Transnet’s floundering rail network.
According to Stats SA, the official unemployment rate nudged up to 35.3% in the fourth quarter of 2021, from 34.9% in the previous three months. The number was slightly worse than the 35.1% median estimate of economists surveyed by Bloomberg, which also reported that SA’s rate was the highest among 82 countries it monitors. The higher rate could also be partially explained by previously discouraged people looking for work again.
Presenting the results of the Quarterly Labour Force Survey in Pretoria, statistician-general Risenga Maluleke said the number of unemployed people increased by 278,000 to 7.9-million, from 7.6-million in the third quarter. The number of employed people rose by 262,000 to 14.5-million.
The number of discouraged job seekers decreased by 56,000 to 3.8-million, while the number of the “not economically active population” decreased by 397,000 to 17.4-million.
The unemployment rate based on the expanded definition, which includes discouraged workers, fell 0.4 percentage point to 46.2%.
A high unemployment rate has marked the SA economy for at least the past two decades and Ramaphosa, who came into power after a decade of economic stagnation during the corruption-scarred Jacob Zuma presidency, has failed to stem the tide. It increased with government restrictions to contain the Covid pandemic, with lockdowns and the closure of businesses and bans on the sale of tobacco and alcohol contributing to a loss of 2-million jobs.
The government has faced criticism for policy-making that is geared towards dated ideologies such as localisation and having overzealous regulation on issues such as competition law, deterring investment. It has refused to lighten labour laws and has been slow in pursuing structural reforms.
Real danger
While the country is short of skills, the government has been cracking down on immigration, seeking to reserve some jobs for South Africans.
Mike Schussler, the chief economist at Economists.co.za, said the unemployment rate “scares me” and the country needs to boost levels of fixed investment. “The investments summits, very bluntly, are talkshops,” he said.
“We need to implement free market reforms in more than one way ... let’s get Eskom and railways to work, we need productivity of those sectors to the fore.”
Just as it was recovering from the battering it got from the Covid-19 outbreak, SA’s economy and business confidence suffered a blow from unrest in KwaZulu-Natal and Gauteng after the arrest of former president Jacob Zuma in July 2021.
Sentiment hasn’t been helped by the state’s inability to hold accountable the perpetrators of the chaos, which killed hundreds of people and led to a loss of R50bn for the economy.
“While economic activity rebounded in the final quarter after being interrupted by multiple shocks in the third quarter, business confidence remained depressed due to slow economic reforms and persistent power shortages, convincing companies not to rush to expand capacity,” Nedbank economists wrote in a research note.
“The unemployment rate will remain structurally high in the short term because the economy is still facing many long-term challenges that are hindering jobs growth. Some of the fundamental structural deficiencies, such as electricity shortages and policy challenges, will take years to resolve, which will contain growth in private sector investment,” they wrote.
Cosatu, a key labour ally of the governing ANC and whose support helped Ramaphosa win the ANC presidency in 2017, said there is a real danger that the unemployment rate, which is already “very alarming”, may rise in the next quarter as the war in Ukraine unfolds and fuel prices keep rising.
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