Business Maverick

Business Maverick: Horror statistics

SA’s shocking unemployment rate remains unchanged

Unemployed graduates from Kwa-Zulu Natal and Pretoria sing as they gather at Burgers Park before marching to the Union Buildings on November 06, 2018 in Pretoria, South Africa. The graduates, some wearing their graduation regalia possess qualifications ranging from economics degrees, fine arts diplomas and teaching diplomas handed over a memorandum to officials demanding government to come up with solutions to tackle the rising unemployment rate. (Photo by Gallo Images / Phill Magakoe)

Somewhat surprisingly, South Africa's unemployment rate did not climb further in the fourth quarter of 2019. But it remains unchanged at shocking levels, giving President Cyril Ramaphosa little to cheer about on this front during his SONA later this week.

In the fourth quarter of 2019, South Africa’s unemployment rate remained unchanged at the nose-bleed level of 29.1%, according to data released on Tuesday, 11 February by Stats SA. 

The agency’s wider definition of unemployment, which includes people who have thrown in the towel and stopped the fruitless search for work, was 38.7%, up a notch from 38.5% in Q3. Even that definition probably understates the sheer scale of the problem. There are plenty of subsistence farmers in rural areas who have never looked for a job in the first place. 

Other data released on Tuesday bodes ill for employment too. Stats SA said manufacturing production fell 5.9% year-on-year in December, its biggest decline since July 2014. Worryingly, output in the motor vehicle sector regarded as a job maker — plunged almost 25%.

As the International Monetary Fund (IMF) recently noted, South Africa’s jobless figures are high even by emerging market standards. The emerging market average is in the single digits, while South Africa’s is on the cusp of 30%. And the numbers look even worse when viewed through the prism of youth unemployment. In South Africa, that figure is north of 50%, while the emerging market average is close to 15%.  

Nor are there any signs that the economy is about to turn a corner and start creating jobs, not least because of demographics versus economic growth: the working-age population is relentlessly swelling, while the economy is barely growing, if it is growing at all.  

“The working-age population increased by 145,000 or 0.4% in the fourth quarter of 2019 compared to the third quarter of the same year. Compared to Q4: 2018, the working-age population increased by 594,000 or 1.6%,” Stats SA said in a statement. The labour market simply cannot absorb new entrants, many of whom we see every day, dancing or juggling or begging at robots, or guarding parked cars in exchange for spare change. 

Commentators often say that among other things, South Africa needs policies that generate employment for the unskilled. 

“Creating more low-skilled jobs to improve labour force participation, especially in the poorest provinces, will spur inclusion,” the IMF recently said. 

Stats SA’s data bears this out. Of the 6.7 million persons officially considered “unemployed”, 55.9% did not have a matric. Hlaudi Motsoeneng was lucky indeed! People with matric accounted for 34.7% of the unemployed, while 6.8% had a tertiary qualification. Only 1.9% of the unemployed in Q4 had university degrees. 

Yet hard choices may have to be made in this regard. Take government’s promise to reduce the cost of doing business. There is a reason why motorists pump their own petrol in most developed economies, and often check their groceries out themselves. 

Such technologies ultimately reduce costs, even if they often annoy the elderly who still drive or shop themselves. Introducing such innovations in South Africa will eliminate tens if not hundreds of thousands of opportunities for unskilled or semi-skilled workers. In South Africa, such technologies are probably not as cost-effective because unskilled labour here remains relatively cheap, but would they would probably still save business costs.

 Elsewhere in the economy, the mining sector is mechanising wherever geology allows, with further job losses for lower-skilled workers who still often hail from poor, rural backgrounds. The farming sector is also embracing new technologies that require fewer hands in the fields. 

Unemployment is, of course, the source of many of South Africa’s wider economic and social ills. It is a prime cause of poverty and inequality, the other two scourges which government officials often bang on about. It also clearly contributes to social unrest. The eastern limb of the platinum belt is at boiling point, and service delivery protests are a routine part of life across most of the country. If you have a regular job, you are probably less likely to throw a rock or burn a tyre to block a road. BM.


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