South Africa

Analysis: Labour Force Survey

By Paul Berkowitz 7 May 2013

On Monday, StatsSA released the findings of its latest labour force survey (LFS). Unemployment rose in the first quarter of 2013 and the number of broadly unemployed people is almost 7 million. By PAUL BERKOWITZ.

StatsSA’s latest LFS release shows that the official unemployment rate rose from 24.9% in the final quarter of 2012 to 25.2% in the first quarter of 2013. The broader rate of unemployment went up more sharply, rising from 35.9% to 36.7%:

The deterioration in the employment numbers in the first quarter of the year is a feature of the season trend in employment numbers. Over the last five years, unemployment rates have fallen significantly in the final quarter of the year, only to correct in the following quarter.

This trend is most prominent in 2008, 2010 and 2011. In the final quarter of last year the recovery of the employment stats was quite muted, as was the subsequent worsening in the first quarter of 2013.

The official unemployment rate appears to have settled around 25%. It has averaged about 25% for the last year. The expanded rate continues to rise, and is now at its highest levels since mid-2011. If it breaches the 37% mark this year it will have set a new record.

The overall trend is depressingly familiar; the economy just doesn’t create enough jobs to absorb the growth in the labour force. Over the last two years there has been a consistent increase in the number of jobs in the economy, but annualised growth only averaged some 300,000 jobs per year, and this has fallen to below 200,000 in recent quarters. The growth in the labour force has been at least 300,000 on an annualised basis, and has been as high as 500 in some periods.

At its best, the economy has done just about enough to keep pace with the growth in labour market entrants. In its worst periods it has seen the gap between graduates and jobs widen by between 50,000 and 100,000 a quarter.

This has meant that the broad pool of the unemployed (i.e. the officially unemployed plus discouraged work-seekers) has continued to grow. In the latest quarter it is just short of 7 million people. At its best levels, in late-2008, there were just over 5 million people:

There’s not too much positive news to take from these numbers. Interest rates have been held low for the last couple of years without any discernible difference to the labour market. The one promising sign is the reduction in the numbers of the unemployed who have been suffering the effects of long-term unemployment. The trend here is weak and only a couple of quarters old, but it is the only indication that there may be a positive change in structural unemployment.

Growth in the economy is expected to increase marginally, but this is unlikely to translate into significantly more jobs. The country will have to sit tight and hope that the performance of our trading partners picks up, that the NDP is swiftly adopted and implemented across government, and that the recent proposals by the department of trade and industry aren’t passed into law.

The labour market is facing enough headwinds as it is, and if we are to have any hope of reducing the unemployment rate then we must stop placing additional barriers in our path. DM

Photo: An unemployed black South African pleads for money or food at a Johannesburg street corner July 21. (Reuters)

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