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First-quarter unemployment rate hits record high of 43.2%, youth jobless rate 74.7%

(Photo: EPA / Nic Bothma)

Under the expanded definition of unemployment which includes discouraged job seekers, the rate rose to a record of 43.2% in the first quarter of 2021 from 42.6% in the previous quarter. Underscoring the gravity of the situation, the youth jobless rate based on the expanded definition now stands at an eye-watering 74.7%. 

President Cyril Ramaphosa’s administration is chalking up lots of records, but not the kind that will go down well with voters in an election year.

The official unemployment rate increased from 32.5% in the fourth quarter (Q4) of 2020 to 32.6% in Q1 in 2021 – a record since the Quarterly Labour Force Survey (QLFS) was launched in 2008, according to Statistics South Africa (Stats SA). The rate under the expanded definition, which includes those who have given up on the hunt for a job, is now 43.2%. Youth unemployment under the expanded definition is a staggering 74.7%, which means that only one in four school leavers who are 24 or under have a job in South Africa. 

Stats SA suspended face-to-face surveys in March 2020 because of the pandemic, and the QLFS has since been carried out by computer-assisted telephonic interviews. 

“Given the change in the survey mode of collection and the fact that Q1: 2021 estimates are not based on a full sample, comparisons with previous quarters should be made with caution,” it said. 

Who knows, perhaps a full sample would have revealed even higher rates of unemployment. The data, even if incomplete, are concerning on all kinds of levels. Growing unemployment means poverty, hunger and inequality are all also on the rise. South Africa’s social fabric is fraying, a point driven home by terrifying rates of gender-based violence and a host of other social ills. Unemployment is perhaps not the root cause of any of these challenges, but it is clearly a contributing factor. It creates despair. 

It’s also a pretty good indicator of an economy that is hardly firing on all cylinders and that remains starved of the investment needed to create jobs in the first place. An unemployment rate that is going north exacerbates the problem, as it means there are fewer households with disposable income to consume goods and services or save capital which can be directed to investment. An unemployment rate heading south means the opposite – more households with disposable income or capital that can be saved or invested. One circle is virtuous, the other is anything but. 

“The number of unemployed persons also remained almost unchanged at 7.2 million compared with the fourth quarter of 2020 (increased by 8,000). The number of discouraged work seekers increased by 201,000 (6.9%),” Stats SA said. More than seven million unemployed – that speaks to an unfolding national tragedy. There are countries with smaller populations than that. 

The economy’s overall performance in Q1 remains uncertain after the 7% contraction in 2020, though it is widely believed to have done better than original assumptions. The central bank, for example, now sees the economy expanding 2.7% in Q1 from a previous forecast of a 0.2% decline. Stats SA will release the Q1 GDP number next week on Tuesday, 8 June. But even if the economy has been growing again, it has been failing on the most vital front – job creation. 

The last thing South Africa needs now is to be haunted by the spectre of “jobless growth”. BM

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