SA’s unemployment rate fell slightly in the fourth quarter, reaching the lowest level in two years, but at 32.7% the country’s jobless rate remains well above prepandemic levels.
Stats SA’s quarterly labour force survey released on Tuesday shows a slight moderation in the jobless rate from the third quarter’s 32.9%. However, at 32.7% the fourth quarter reading came in slightly higher than the 32.6% median estimate of economists surveyed by Bloomberg.
The unemployment rate according to the expanded definition, which includes people who were available for work but not looking for a job, stood at 42.6% from 43.1% previously.
While the latest jobs report offers some good news, it does not detract from the country’s sky-high unemployment rate, which has consistently remained above 20% for more than two decades.
Efforts by President Cyril Ramaphosa, whose first four years in office were blighted by the failure of his government to create jobs, have been further eroded by the country’s energy crisis. Job creation was initially stymied by the slow rollout of structural reforms, and then by the Covid-19 pandemic that crushed growth prospects from 2020, leading to 2.2-million job losses.
The power situation is severely affecting economic growth and jobs at a time when the country urgently needs to retain its competitiveness and attractiveness.
According to PwC’s latest economic outlook report, power cuts reduced potential real GDP growth by five percentage points in 2022, costing the country about 600,000 potential jobs.
PwC chief economist Lullu Krugel said the channels of negative impact on the economy, all of which have a direct effect on employment, have been diverse. These include “weaker consumer confidence weighing on retail spending, lower business confidence impacting investment decisions and tainted international perceptions limiting foreign investment”.
Stats SA said the unemployment rate averaged 33.5% in 2022, lower than the 34.3% average for 2021 but higher than the 28.7% average for 2019.
“Unemployment levels are persistently higher post-2016, reaching a peak in the fourth quarter of 2021 with 7.9-million unemployed persons when it hit a record high of 35.3% in the fourth quarter of 2021, during the Covid-19 pandemic fallout,” Stats SA said.
The numbers are worse for youth unemployment, which was measured at 61% in the fourth quarter.
SA’s labour market is 594,000 jobs below the peak employment level achieved in 2018’s fourth quarter, and 448,000 jobs below the employment level that prevailed before the pandemic.
But there were some employment gains. Stats SA said the number of employed people rose by 169,000 during the quarter.
The performances of the various industries during the quarter and the year were mixed.
The finance, private households, trade and transport industries recorded the largest job gains while the largest losses were in community and social services, agriculture and construction.
The manufacturing sector performed well on a net basis during the year, adding 340,000 jobs. Employment decreased in the agricultural sector and private households during the year, falling by 7,300 and 116,800, respectively.
Nedbank senior economist Johannes Khosa said the contraction in the agricultural industry mainly reflected the impact of floods in some parts on the country during the second quarter, while the decline in private households reflected the impact of higher costs of living that caused households to reprioritise spending.
But overall the economy continued creating jobs in the fourth quarter with cumulative net job gains over the past five quarters amounting to 1,652,486.
Stanlib chief economist Kevin Lings said there was some concern that the increase in electricity outages during the fourth quarter would result in further job losses.
“Instead, the economy added 169,000 jobs in the quarter suggesting a high degree of resilience within the formal business sector. Many businesses are acutely aware of the difficulty in finding skilled individuals in SA and don’t want to risk having to close key areas of their business,” Lings said.
FNB senior economist Thanda Sithole said part of the robust annual growth in the labour force is due to the lower base, created by the lingering impact of the July 2021 civil unrest.
FNB said while it is encouraging that the labour market has gained momentum over the past four quarters, the bank expects the recovery in employment to be stymied by the prevailing domestic and global challenges.
“These include slowing global growth, persistent load-shedding at a higher intensity, depressed business confidence and a subdued level of investment, at 9.9% of GDP, that remains significantly below the National Development Plan’s target of 20% of GDP by 2030,” FNB said.
Update: February 28 2023
Article has been updated throughout.
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