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SA unemployment rate nudges down to 32.7% in Q4 2022, signalling no meaningful improvement

SA unemployment rate nudges down to 32.7% in Q4 2022, signalling no meaningful improvement
(Photo: EPA-EFE / Kim Ludbrook)

SA’s unemployment rate in the fourth quarter of 2022 edged lower to 32.7% from 32.9% in the previous quarter, Statistics South Africa said on Tuesday. The bottom line is that there was no meaningful improvement in the numbers that highlight one of the starkest scourges of South Africa’s low-growth economy.

South Africa’s unemployment rate remains sky high and the best that can be said about a terrible situation is that the numbers appear to be moving in the right direction.

The data released by Statistics South Africa (Stats SA) on Tuesday showed that the unemployment rate edged down to 32.7% in the fourth quarter (Q4) last year from 32.9% in the previous quarter. That may be as good as it gets for a while. 

The surge in rolling blackouts means the economy this year is expected to grow between 0.3% and 0.9%, according to official forecasts, and that is hardly going to trigger a hiring binge among hard-pressed businesses. 

Under the expanded definition, which includes discouraged job seekers, the rate fell to 42.6% from 43.1%. Neither number is completely accurate and economists tend to use them to gauge broad trends.

“In the fourth quarter of 2022, South Africa had 7.8 million persons who were without work, looking for work and available to work, of which 6.1 million were in long-term unemployment and 1.7 million in short-term unemployment,” Stats SA said.

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The bottom line is that there was no meaningful improvement in the numbers that highlight one of the starkest scourges of South Africa’s low-growth economy.

South Africa’s economy has many structural challenges thwarting the creation of jobs on the scale needed to address this scourge. But the energy crisis is clearly the biggest shock at the moment to both economic growth and employment levels. 

PwC has estimated that power cuts reduced potential real gross domestic product (GDP) growth by five percentage points in 2022.

Read more in Daily Maverick: “PwC estimates rolling blackouts knocked up to five percentage points off SA’s 2022 GDP growth

“This cost the country around 600,000 in potential jobs,” PwC said in its latest monthly SA Economic Outlook published on Tuesday.

“The channels of negative impact on the economy are diverse, including: weaker consumer confidence weighing on retail spending; lower business confidence impacting investment decisions; and tainted international perceptions limiting foreign investment.

Heightened social risk

“Looking beyond GDP, society also faced increased crime risk due to off-line security systems, longer journeys linked to delayed transport, and unreliable communication from slower mobile telecommunication services, amongst other issues. All of these factors contribute to heightened social risk in the country,” PwC noted.

Add South Africa’s swollen levels of unemployment – which have been aided and abetted by persistent power outages – to that list of factors raising the country’s “social risk” profile.

The equation is fairly simple: U + PC = SU. (Unemployment + Power Cuts = Social Unrest). And this is all taking place against the backdrop of a “cost-of-living crisis” which is also a consequence of U + PC.

BankservAfrica – an automated payments clearance house that tracks wide trends related to pay and income – said on Tuesday that average take-home pay in South Africa maintained its downward decline in January.

“The average nominal take-home pay for January was R14,305, which was 7.5% lower than the R15,467 recorded in January 2022,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.

“On a monthly basis, January’s nominal average take-home pay was also somewhat lower than the R14,684 in December.”

And average real take-home salary declined 13.7% in January 2023 compared with a year earlier.

So real household incomes in South Africa are in decline when consumer food inflation is running at 13.8%. And the energy crisis is also the main factor behind this depressing state of affairs.

Dismal prospects

“The constant load shedding, high production costs due to high fuel prices and rising wage demands – as well as elevated interest rates and moderating demand – are all contributing to the dismal growth prospects faced by companies.

“With many resorting to redirecting their capital earmarked for investment towards self-sufficiency and becoming less dependent on Eskom, employment growth and salary increases are likely to be impacted,” BankservAfrica said. 

This also threatens the marginal employment growth seen in last year’s unemployment numbers.

“While employment levels increased notably in 2022, though still catching up to the job losses incurred during the Covid pandemic, January 2023 showed the opposite,” BankservAfrica said. 

Its number-crunching suggests that 606,500 fewer salaries were paid into South Africans’ bank accounts in January 2023 than in the previous month. 

And 60% of these job losses affected people earning less than R5,000 a month, signalling lay-offs after a spate of temporary low-wage hiring for the festive season.

The outlook for this quarter’s unemployment numbers already looks quite grim. DM/BM

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