South Africa’s economic powerhouses, Gauteng and KwaZulu-Natal, are shedding jobs at a pace that deepens concerns about the country’s shrinking industrial base, even as the national unemployment rate edged lower.
Stats SA data shows that Gauteng and KwaZulu-Natal, which together generate half of national output, recorded unemployment rates above 30% in the fourth quarter of 2025.
The two provinces, home to about 45% of the population, also recorded the biggest quarterly job losses, with employment falling by 54,000 in Gauteng and 41,000 in KwaZulu-Natal.
The losses come against a backdrop of high-profile industrial closures and layoffs that have hollowed out manufacturing capacity in both provinces.
British American Tobacco’s decision to shut its Heidelberg cigarette plant, Tongaat Hulett’s prolonged restructuring and asset sales, and ArcelorMittal South Africa’s repeated warnings about the viability of its long-steel operations have become emblematic of a broader erosion of industrial employment.
“Gauteng and KZN are manufacturing hubs, that’s where the factories are. But … SA has been de-industrialising for many years now, meaning we are closing down the factories, hence the increase in unemployment,” said Dawie Roodt, chief economist at Efficient Group.
Grim data
Stats SA data shows the manufacturing sector shed 61,000 jobs nationally in the three months to end-December, one of the steepest declines across all industries, reinforcing concerns that the industrial base continues to contract despite policy commitments to reindustrialisation.
Stanlib chief economist Kevin Lings said Gauteng has a population growth issue.
“It is the fastest-growing area, over 2% a year, which is very high. The influx of people into Gauteng is enormous, and if you look at infrastructure, it is decaying; the city can’t cope with the number of people that have moved in,” Lings said.
“The higher income earners are moving out, there is less investment in the city, they are choosing Cape Town as a destination … Gauteng needs to revitalise its infrastructure and improve service delivery.”
KwaZulu-Natal faces severe challenges, including a car manufacturing industry that is under immense pressure, Lings said. The oil refinery industry in the province has been scaled back, and structural water issues make it difficult to “generate decent economic growth”, he added.
In stark contrast the Western Cape, where the economy is more heavily weighted toward agriculture, tourism and business services, recorded the biggest employment gains. It added 93,000 jobs in the quarter and maintained the lowest provincial unemployment rate at 18.1%.
“The Western Cape is attracting a lot of people; they are moving there with a lot of money,” Lings said. “New investments are being undertaken, the infrastructure is better maintained, [and] there is a lot of small business development, and that’s where the engine of economic growth starts,” Lings said. “These are quite strong dynamics.”
Delivering the unemployment data at Stats SA’s Isibalo House headquarters in Pretoria on Tuesday, statistician-general Risenga Maluleke said the unemployment rate eased to 31.4% in the fourth quarter from 31.9% in the preceding three months, thanks to the addition of 44,000 jobs.
Tuesday’s unemployment reading is the lowest since the third quarter of 2020, the height of the Covid-19 global pandemic. Maluleke said the unemployment rate is starting to decline as more jobs become available.
Still, the official rate is about five times that of South Africa’s G20 peers.
Maluleke noted that during the last quarter of 2025 South Africa had a working age population of 42.1-million and a labour force of 24.9-million. The number of unemployed people amounted to 7.8-million and 3.7-million discouraged job seekers. A further 17.1-million people were outside the labour force.
He said the number of people employed in the formal sector increased by 320,000 in the three-month period, while employment in the informal sector decreased by 293,000 over the same period.
The largest increases in formal employment were recorded in community and social services (46,000), construction (35,000), finance (32,000), transport (28,000), utilities (24,000), and private households (18,000).
Decreases in employment were recorded in trade (-98,000), manufacturing (-61,000), and mining (-5,000).
Jobs, votes and violence
The unemployment crisis has unfolded alongside a steady erosion in ANC electoral support over the past decade, reflecting growing voter unease with the economy’s inability to generate jobs.
Due to the country’s persistent unemployment challenges, especially among the youth, the argument for making the R370 monthly social relief of distress grant a permanent measure is gaining increasing attention among unions and several political parties.
In September last year, Gauteng premier Panyaza Lesufi and his KwaZulu-Natal counterpart, Thami Ntuli, attended a two-day bilateral meeting aimed at enhancing service delivery and governance across the two provinces.
The get-together came after President Cyril Ramaphosa told ANC councillors that they should seek to emulate the service delivery successes of DA-led municipalities such as Cape Town and Stellenbosch.
Four years earlier, Gauteng and KwaZulu-Natal bore the brunt of a national wave of violence, ignited by the imprisonment of former president Jacob Zuma, that is estimated to have cost the economy R50bn. More than 350 people died while shops, warehouses, factories, pharmacies and malls were looted and destroyed in what President Cyril Ramaphosa described as a failed insurrection.
The two provinces also experienced a dramatic shift in political allegiances during general elections in 2024. In Gauteng, ANC provincial leader Panyaza Lesufi was forced to form a coalition government after its support plummeted to 36.4%, while in KwaZulu-Natal the Zuma-led MK party amassed 1.6-million votes to become the single biggest party. Only a coalition comprising the IFP, ANC, DA and NFP prevented it from becoming the provincial government.
The unemployment figures come after mineral & petroleum resources minister and ANC national chair, Gwede Mantashe, sparked outrage last month after suggesting that the high unemployment rate was partly due to young people being too lazy to look for jobs and relying on government handouts instead.
In his state of the nation address in Cape Town last week, Ramaphosa said the number of unemployed South Africans and the struggle for young people to secure their first job are of national concern.
He reiterated that job creation remains a priority for the government, one that the state’s Operation Vulindlela aims to tackle by removing structural barriers to investment such as power cuts, data costs and logistics bottlenecks.
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