The good news is the economy is creating jobs. There were over a quarter of a million of them during the fourth quarter of 2021, of which more than half were in the formal sector — “quality” jobs to which the labour movement aspires.
The bad news is that the rate of job creation has not picked up nearly fast enough to undo the damage done first by Covid-19 lockdowns and then by riots in July in KwaZulu-Natal and Gauteng. The fourth-quarter increase wasn’t nearly enough to counter a sharp decline in the previous three months. By the end of 2021, the number of people in employment was still almost half a million down on a year before, even though the economy posted growth of almost 5% as it recovered from the worst of the lockdowns.
The shocking net result is that it’s still the case that close to 2-million jobs have been lost since the start of the pandemic.
A second piece of bad (and good) news is that at least people have been encouraged to start looking for work again, whether by the fact that the economy was once again creating jobs in the fourth quarter, or because they are simply desperate. But that means more people are counted as part of the labour force looking for jobs, with the result that SA’s unemployment rate, already one of the world’s highest, has risen even higher, to 35.3%. The expanded unemployment rate, including those too discouraged to look for work, is 46.2%. Fewer than 40% of adult South Africans are employed, which is extraordinarily low by global standards.
It is a sobering picture of a jobless recovery in an economy that already had a record unemployment rate. It is a picture SA’s policymakers should be looking at very carefully, and urgently.
Evidence on household incomes and spending from the Reserve Bank indicates that consumer spending has picked up despite the job losses. And the economy itself has recovered faster than expected, which was reflected in the huge revenue overrun the finance minister reported in his budget in February, and which the SA Revenue Service might even beat when it closes the books on the fiscal year today.
Yet the labour market hasn’t picked up as it should. High levels of uncertainty may have contributed to the fact that employers got rid of workers while they could during the lockdowns, and have been reluctant to re-hire or expand even as the lockdowns seem to be slowly coming to an end.
That suggests greater certainty about the path of the pandemic and how the government plans to manage it would help to give companies the confidence to start hiring again. That is particularly the case in the labour-intensive hospitality and entertainment industries that have been hit hardest by serial lockdowns. The government needs to stop procrastinating about its plan to reopen the economy — and it needs to work a lot harder to get more people vaccinated ahead of the next wave.
That is more urgent than ever at a time when the fallout from Russia’s invasion of Ukraine has punctured the global economic recovery from Covid-19 and created huge uncertainty about the economic outlook, which will weigh on business confidence globally and in SA.
The government has put plenty of money (and effort) over the past two years into the Presidential Employment Stimulus, which has now generated more than 800,000 temporary job opportunities for unemployed youth — jobs that do seem to have boosted the latest numbers. But while that is laudable, it is not a durable solution to the unemployment crisis — and nor are publicly funded measures to cushion the impact such as the social relief of distress grant, crucial as they may be.
All of which leads back to the same answer as always — the government needs to speed up implementing reforms to boost investment and growth, as well as on fixing the machinery of state. The jobless recovery points too to the need for policymakers to have another look at the controversial subject of labour market regulation and flexibility.
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