When SA went into hard lockdown and the economy came to a near standstill in the second quarter of last year, 2.2-million jobs were lost. And though the economy and employment have begun to recover, many of those jobs have not come back — almost 1.4-million fewer people are employed now than before the Covid crisis.
That’s the bottom line of the latest quarterly labour force survey numbers from StatsSA. They are the first official figures that enable us to compare this year’s first quarter with last year's pre-lockdown first quarter.
The survey is most often looked to for the unemployment rate, which edged up to a record 32.6% in the first quarter, lower than many economists had expected.
But it’s the employment rate that shows the scale of SA’s jobs crisis even more dramatically. Just 38 of every 100 adult South Africans (14.9-million people) were in paid employment of any kind in the first quarter, down from 42 before the crisis, though up from the 36 to which the employment rate crashed during the hard lockdown. Globally, the norm is closer to 60.
The net job losses are not as bad as the 2-million plus predicted under the worst-case Covid scenarios, just as the economy’s 7% contraction last year was not as steep as predicted in the darkest days of the hard lockdown.
But the economy clearly is bouncing back faster than the labour market, with economists forecasting growth of at least 3%-4% this year, thanks to booming commodity prices and recovery in most sectors. The question is how deep the Covid scars will be on the labour market, which was already in crisis before the pandemic.
And the details of the latest jobs figures are important in providing a window on the dynamics of the labour market — and raising questions about policy choices.
The recovery in employment in the second half of last year appears to have stalled, with a net loss of 28,000 jobs during the first quarter. That has put a question mark over the pace of the economic recovery itself, with StatsSA due to release eagerly awaited first-quarter GDP figures on Tuesday.
However, the first quarter generally sees job numbers fall after the festive season. This year’s decline is arguably lower than might have been expected — and is in any event so marginal that it is unlikely to reflect a trend. Economist Neva Makgetla of the nonprofit Trade & Industrial Policy Strategies research group notes the rule of thumb for a meaningful swing is 50,000 jobs.
Nor is the headline unemployment rate that useful in itself, because of the extent to which it reflects how many people are actively looking for work. One striking feature of the labour force survey has been the ups and downs of the “discouraged workers”, who have given up looking for jobs and are excluded from the pool of people counted by StatsSA as being part of the labour force when calculating the headline unemployment rate.
In the second quarter of last year the unemployment rate declined even as 2.2-million people lost their jobs, because so many couldn’t even look for work — or decided there was absolutely no point. This time around, again, the number of “discouraged” work-seekers has climbed, so that the headline unemployment rate at 32.6% is hardly higher than the 32.5% in the previous quarter. On the “expanded” definition, however, which includes the discouraged work-seekers, the unemployment rate rose to 43.2% in the first quarter.
The standout theme, in SA and globally, is how uneven and unequal the impact of Covid and lockdowns has been on sectors, and across genders, age groups and skills levels. The StatsSA numbers show the formal sector is gaining jobs on a quarterly basis — 79,000 in the first quarter — and over the year has been the least impacted, with a decline of just 6% in employment.
The big losses have been in the informal sector and in domestic work, which are still down 14% for the year, together losing more than 600,000 jobs. Sectors such as mining, finance and transport are now gaining jobs on a quarterly basis; others such as construction, trade (which includes hotels and restaurants) and domestic work are still shedding jobs.
Even more stark are the contrasts within the labour force. The big losses have been among workers with lower skill levels and those in sales and services — whereas the number of professional, technical and managerial jobs has increased. More than half of the unemployed did not get as far as matriculating while only 2% of them are graduates.
The expanded unemployment rate.
— IN NUMBERS: 43.2 %
Women have been hit much harder than men. Younger workers have been hit harder than older ones, with headline unemployment at 63% for those aged between 15 and 24 and an expanded rate that is much higher.
“In effect almost three-quarters of all young people in SA are unemployed because they simply cannot find work or they have stopped looking. That is disastrous by any standard,” says Stanlib economist Kevin Lings.
The unequal impact is highlighted in the National Income Dynamics Study-Coronavirus Rapid Mobile Survey (Nids-Cram), the latest wave of which finds that employment in January was 7.2% lower than in February last year — but that the job losses correlated strongly with age and gender. While 78% of men who had jobs in February 2020 were still employed in January 2021, for women that was 70%, reflecting a “large female penalty” across ages, regions and education levels, the latest Nids-Cram found.
Says University of Cape Town researcher Reza Daniels: “Our data shows lockdown regulations really matter to the labour market. The recovery in the labour market will parallel what’s happening with Covid.”
Makgetla argues, however, that it’s not the restrictions that are the problem but Covid itself — which is why the vaccine rollout matters more than ever. “The rest of the economy is recovering on the back of commodity prices, but it doesn’t generate jobs unless people are going out and buying services,” she says.
PwC economist Lullu Krugel expects the economy to create 384,000 more jobs this year and another 300,000 next year. “However, at this rate we estimate that the total number of employed will only return to 2019 [pre-pandemic] levels by 2025,” says Krugel.
Economists reckon the R61bn disbursed through the Unemployment Insurance Fund/Ters scheme helped to retain jobs, by providing employers with the means to keep people on the payroll, as well as to support workers’ incomes.
Some are less impressed with the presidency’s “employment stimulus” package, on which R12.6bn has so far been spent to create 700,000 job “opportunities”, more than 300,000 of these for temporary teachers’ assistants in 28,000 schools. This is part of a planned R100bn package that aims to create 3.5-million job opportunities over five years.
Whether the initial round is reflected in the StatsSA quarterly figures is not clear — and some (such as Wits University’s Michael Sachs) question whether the programme can be regarded as a stimulus given that it’s likely to be offset by a decline in the public sector workforce itself, given the government’s planned fiscal consolidation.
In the end, the consensus is that SA needs much higher rates of investment and growth if it is to generate the jobs needed even to return to pre-pandemic levels — never mind absorb all the new entrants joining the labour market each year. And that means implementing all those reforms the government has long promised.
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