South Africa’s unemployment rate climbed to a record 30.1% in the first quarter of this year from 29.1% in the fourth quarter of last year, Stats SA said on Tuesday 23 June, the day before Finance Minister Tito Mboweni unveils his emergency budget.
Under the wider definition that includes those who have given up looking for work, the rate hit 39.7 %. So at least four out of 10 South Africans in the labour market have no job. The data also served as a sombre backdrop to the “Sustainable Infrastructure Development Symposium”– a title that could only have been dreamt up by a technocrat with too much time on their hands.
The unemployment rate since Q1 has certainly surged, with the only question being by how much, and, like the pandemic itself, has yet to reach a peak. Edcon has since announced 22,000 layoffs, Sasol has signalled its intention to cut jobs to stay afloat, and entire labour-intensive sectors such as tourism, retail and restaurants have been decimated.
“The data is largely irrelevant to be honest. The big hit unfolds through Q2, so the only thing you can take out of the Q1 data, is that the labour market was weak to start with. It was vulnerable to a hit, and the hit materialised,” George Glynos, head of research and analytics at ETM Analytics, told Business Maverick.
“In the short term, I think it’s quite likely that the unemployment rate will jump to well over 40% in the Q2 data,” he said.
Is there a silver lining? Well, Q1 will likely be the best South Africa does on the jobs front.
“… despite official unemployment exceeding 30%, this will most likely be this year’s strongest jobs report. The magnitude of the economic slump could result in the broader definition increasing much more than the official unemployment rate, as people prefer the safety of their homes instead of contending with a weak and deteriorating job market,” NKC African Economics said in a note to clients.
This means that hunger, poverty and inequality are all on the rise – a trend heart-wrenchingly visible to anyone who has passed a busy intersection in Johannesburg in recent weeks.
This is an unfolding human tragedy on an epic scale, and one that could retard or cripple prospects for a recovery. Many businesses that go under now may never return, and will take the jobs they created to the grave with them.
People without jobs have limited funds to spend, save or invest, thereby creating a vicious cycle. This also adds more fuel to the raging fire that is social unrest in South Africa. BM