Business Maverick


Economic horror show: South Africa’s unemployment rate hits new record of 34.9%

Economic horror show: South Africa’s unemployment rate hits new record of 34.9%
Men wait for work in the informal sector with about 200 other jobseekers at a road junction in Cape Town, South Africa. (Photo: EPA-EFE / NIC BOTHMA)

South Africa’s unemployment rate hit a new record high of 34.9% in the third quarter (Q3) from 34.4% in Q2, Statistics South Africa (Stats SA) said on Tuesday. Under the expanded definition, which includes discouraged jobseekers, the rate rose 2.2 percentage points to a shocking 46.6%. It is all very discouraging.

The unemployment rate is, in many ways, the key indicator of the South African economy. Beyond the economy’s wider performance — captured in the gross domestic product (GDP) data — it is a barometer for the economic wellbeing of South Africans. Having a job, even a low-paying one, provides a person with a steady income, a budget to manage and a reason to get out of bed in the morning. Not having one heralds uncertainties regarding bills or where the next meal comes from. The pittance that is social grants merely blunts the harsher edges of this state of affairs. 

And the unemployment rate indicates that the South African economy is still barreling down the wrong path. The official rate climbed to 34.9% — a record high since the launch in 2008 of the Quarterly Labour Force Survey — in Q3 from 34.4% in the previous quarter. Under the expanded definition, which includes discouraged jobseekers, the rate shot up to 46.6% from 44.2%. 

This means almost half of the economically active population has no job. And the youth unemployment rate is now 66.5% under the narrower definition, which is surely a recipe for social and political unrest. 

This trajectory is simply not sustainable. 

“The number of discouraged work-seekers increased by 545,000 (up by 16.4%) and the number of people who were not economically active for reasons other than discouragement also increased by 443,000 (up by 3.3%) between the two quarters, resulting in a net increase of 988,000 in the not economically active population,” Stats SA said. 

So the ranks of those discouraged or not economically active are swelling. 

Demographics are among the many factors at play here. The South African economy is simply not growing at a pace that can absorb all of the job market’s new entrants. 

“The working-age population increased by 146,000 or 0.4% in the third quarter of 2021 compared with the second quarter of 2021. Compared with Q3: 2020, the working-age population increased by 578,000 or 1.5%,” Stats SA said. 

And the blood bath has been pretty much across the board. 

“Seven out of eight industries recorded formal sector employment losses,” Stats SA said. 

Only the finance sector recorded gains. The other seven broad industries surveyed — mining, manufacturing, utilities, construction, trade, transport and services — all employed fewer people in Q3 compared with Q2. 

This is a quarter in which the economy is widely believed to have contracted, not least because of the wave of violence and looting that shook Gauteng and KZN in July. The economy also remains infected by the Covid-19 shock. But South Africa has long been shedding — some might say shredding — jobs.

The bottom line is that so long as the unemployment rate keeps rising, poverty and inequality will also continue to grow in tandem. Containing this trifecta of woes is constantly held up by ANC mandarins as their ultimate policy goal. A mounting body of evidence suggests they have failed miserably on this front. DM/BM

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