Business Maverick

ANALYSIS

SA jobless rate dips slightly in Q2, but is still sky-high at 32.6%

SA jobless rate dips slightly in Q2, but is still sky-high at 32.6%
Men stand on a roadside seeking casual labour. (Photo: EPA / Nic Bothma)

South Africa’s unemployment rate fell slightly to 32.6% in the second quarter (Q2) of this year from 32.9% in Q1. The best that can be said is that at least the trend is going the right way, but there are worrying signs, such as a significant decline in manufacturing jobs.

At 32.6%, South Africa’s unemployment rate remains sky-high and is a global chart-topper on this dismal front, according to most online searches. That’s probably because no one bothers to take note of Zimbabwe any more.

Still, the trend is at least going in the right direction: this was the seventh consecutive increase in employment since Q4 2021. But the pace remains painfully slow when one considers what a potentially explosive ticking time bomb such rates of joblessness represent in a country that also tops the global charts for inequality.

“The marginal decrease in the Q2 unemployment rate means precious little, considering the millions of people who remain despondent and jobless. The economy’s weak growth outlook bodes ill for future employment creation, and we forecast South Africa’s unemployment rate will hover at current high levels over the medium term,” Jee-A van der Linde, senior economist at Oxford Economics Africa, said in a note on the data.

Worryingly, the data show a significant decline in manufacturing employment in the three months from April to June, even though the sector posted output growth of 2.3% over that timeframe. 

Read more in Daily Maverick: Robust SA June manufacturing, mining data underscore private power generation, hold promise for Q2 growth 

Manufacturing employment fell by 5.8% in Q2 compared to Q1, despite the rise in production over the same period, suggesting that the costs of self-generation in the face of the power crisis are leading to cost cuts in other areas such as labour.

So it looks like a case of what economists term “jobless growth” and there have been signals in this regard. The Absa Purchasing Managers’ Index, a key indicator of confidence in the manufacturing sector, remained below the 50 neutral mark for the period. Pointedly, this was also the case for the employment index, indicating a reluctance to hire.

Having said that, compared with the same period last year, there was a 3.4% rise in manufacturing employment. What happened in Q2 was a reversal of a positive employment trend in the sector and it is a number to keep a sharp eye on for Q3.

Overall, six of the 10 broad industries captured in the data saw increases in employment. Construction led the way with an 8.6% quarterly increase, representing the addition of 104,000 jobs. Construction is labour-intensive, so that is to be welcomed. One explanation could be the scramble to install rooftop solar panels, if that is counted as a construction activity.

Mining adds jobs

The mining sector saw a 7.5% quarterly rise in employment or 31,000 added jobs compared with the previous quarter. It’s not immediately apparent what drove that, as the sector is under pressure in the face of generally depressed prices, the power crisis and Transnet’s ongoing woes.  

There are still glaring age, gender, provincial, racial and educational disparities in employment which are hardly going to see meaningful change from one quarter to the next.

“In Q2:2023 the labour force participation rate was highest among South Africans aged 35 to 44 years (78.8%); young people aged 15-24 had the lowest labour force participation rate at 27.2%,” Statistics South Africa (Stats SA) said.  

Among provinces, the Western Cape had the lowest unemployment rate at 20.9% — down from 21.6% in the previous quarter — while the Eastern Cape’s unemployment rate was the highest at 39.7%, down from 40.0% in the previous quarter. Expect the DA to point to that.

There were two million more men employed than women in South Africa in Q2, a reflection of long-entrenched gender disparities.

And 50.1% of the unemployed in Q2 lacked matric, while only 2.4% of the unemployed were university graduates. As accountancy firm PwC recently noted, skilled jobs account for 25% of all employment in South Africa, and people with a university education remain in high demand in the jobs market.

Read more in Daily Maverick: Unskilled workers more vulnerable in SA’s depressed labour market – PwC data

The bottom line is that with the economy expected to grow by less than 1% this year — with some sectors haunted by the spectre of “jobless growth” — don’t expect any meaningful decline in the unemployment rate anytime soon. Meanwhile, the fuse on that social time bomb is shortening. DM

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