SA’s economy is not creating jobs fast enough to absorb all the people entering the job market, which has led to the number of job seekers unable to find work rising to a new high of almost 8.4-million people.
SA added about 1.8-million jobs since the start of 2022. This was mostly towards the end of 2022 and the beginning of 2023. Over this period, the labour force increased by about 2.2-million to 25-million. This resulted in the total number of unemployed people in SA increasing to a 8.38-million in the second quarter of 2024.
Despite the recovery in the labour market after the impact of Covid dissipated, the economy has failed to keep pace with growth in the population over an extended period, Stanlib chief economist Kevin Lings said.
Stats SA announced on Tuesday that the official unemployment rate rose by 0.6 percentage points in the second quarter to 33.5%.
The quarterly labour force survey showed that the number of employed decreased by 92,000 to 16.7-million, while the number of unemployed rose by 158,000 to 8.4-million due to an increase of new entrants in the labour market.
Under the expanded definition of the unemployment rate, which counts not only those seeking work but those too discouraged to look for a job, there was an increase of 0.7 percentage points to 42.6% in the second quarter. People aged 15-24 years and 25-34 continue to have the highest unemployment rates at 60.8% and 41.7%, respectively.
“It is worth highlighting that the recent increase in the unemployment rate has occurred despite an improvement in electricity production. This likely reflects the fact that business confidence remains subdued, with businesses focused on cutting costs rather than investment and expansion,” Lings said.
The largest number of job losses was in the trade sector, which shed 111,000 jobs during the quarter. That was followed by 45,000 fewer jobs in agriculture, 18,000 in private households, 11,000 in construction and 9,000 in finance. The manufacturing sector added 49,000 jobs over the period. The Western Cape, Mpumalanga and KwaZulu-Natal recorded the largest employment decreases. Gauteng saw the largest increase.
The data heaps pressure on the government, a blend of political parties that are ideologically divergent but broadly share the ambition of putting millions of South Africans into jobs. Lings said the government’s emphasis on infrastructural development and policy reform needed to gain momentum to lift the annual growth rate above 3%.
The economy grew 1.9% in 2022 and 0.7% in 2023, and GDP is broadly expected to average about 1% in 2024. The Reserve Bank has forecast growth of 1.5% in 2025 and 1.7% in 2026.
Stats SA data shows a marked disparity remains in unemployment rates between groups with different levels of education. The graduate unemployment rate decreased by 2.1 percentage points to 9.7%, while the unemployment rate for those with matric and less than matric was 35.8% and 39.3%.
The Bureau for Economic Research (BER) said in a recent research note that the economy’s failure to absorb more skilled and semi-skilled workers highlighted the structural unemployment problem.
“Tertiary sectors (such as trade and finance) are the largest employers and are experiencing the fastest employment growth. However, they are unable to absorb SA’s stock of unskilled and semi-skilled labour, for which demand from the manufacturing and construction sectors has declined,” the BER said.
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