The rate of joblessness in South Africa is set to remain stubbornly high if the economy continues to grow less than 3% as the official unemployment rate edged back above 32% in the last three months of 2023, following two consecutive quarters of decline after half of industries recorded job losses.
Statistics South Africa (Stats SA) yesterday reported that the unemployment rate ticked up slightly by 0.2 of a percentage point to 32.1% in the fourth quarter of 2023, up from a one-year low of 31.9% in the third quarter of 2023.
Stats SA’s Quarterly Labour Force Survey (QLFS) released yesterday showed that the number of unemployed persons increased by 46 000 to 7.9 million.
The QLFS also indicated that the number of employed persons fell by 22 000 to 16.7 million after rising by eight straight quarters, having surpassed the pre-Covid level of 16.4 million in the first quarter of 2020.
The crisis with job creation in South Africa is more apparent when gleaned over a 10-year period as the number of unemployed people surged from 4.8 million in the fourth quarter of 2013 to 7.9 million in the fourth quarter of 2023.
Stats SA said the labour force rose by 25 000 to 24.6 million in the fourth quarter of 2023, but the labour force participation rate and absorption rate both decreased by 0.2 of a percentage point to 60.0% and 40.8%, respectively.
Statistician-general Risenga Maluleke said five industries contributed to job losses in the fourth quarter, with community and social services shedding the most jobs.
“We have lost 171 000 in community and social services. We have also lost in construction 36 000, and in agriculture 32 000 jobs,” Maluleke said.
“The number of people who were not economically active for reasons other than discouragement increased by 218 000 to 13.4 million, while discouraged work seekers decreased by 107 000 in the fourth quarter of 2023 compared to the third quarter of 2023. This resulted in a net increase of 111 000 in the not economically active population.”
Stats SA said the unemployment rate according to the expanded definition eased slightly by 0.1 of a percentage point to 41.1% in the fourth quarter of 2023.
However, Anchor Capital investment analyst Casey Sparke said material job creation had only occurred when gross domestic product (GDP) growth approaches 3% per annum in the domestic economy.
Sparke said businesses, however, remained under significant pressure from the ongoing effects of load shedding, which was also weighing on jobs and the unemployment data.
“Thus, the economy is simply not growing at an adequate rate to sustainably boost long-term employment prospects for South Africans,” she said.
“At the end of the day, SA’s unemployment problem is a complex and multifaceted issue that requires sustained and co-ordinated efforts from all sectors of society to create inclusive and sustainable employment opportunities for all South Africans.”
This was a view reiterated by Oxford Economics Africa head of macro Jacques Nel, who said yesterday that South Africa’s “economy is in ICU”.
Nel said: “South Africa’s unemployment rate remained far too high and has not declined sufficiently from the pandemic peak of 35.3% which was reached in the fourth quarter of 2021.
“The Q3 2023 GDP figures showed that the economy recorded no growth during the preceding three years, yet it still shed a lot of jobs in the fourth quarter,” Nel said.
“While the economy is haemorrhaging jobs, the fiscus is haemorrhaging fiscal space. The only way to stop the economic bleeding would be for Finance Minister Enoch Godongwana to operate with a sabre instead of a scalpel.”
Godongwana will be tabling his Budget Review today amid a shrinking revenue base as company taxes deteriorate on the back of challenging business conditions which have resulted in a number of retrenchment notices.
Anglo American Platinum on Monday issued a section 189A notice that it will retrench 3 712 full-time employees across various business operations, and about 620 contractors across the company’s production bases, mainly due to declining platinum group metals (PGM) basket prices, declining PGM production output, reduced productivity, significant cost escalations and others.
Kumba Iron Ore yesterday also unpacked its plans to retrench about 500 workers, citing the constraints on Transnet rail and port infrastructure that the company relies on to transport the steelmaking material.
Nedbank economist Johannes Khosa said the unfavourable economic environment was clouding employment prospects, and the country’s crippling structural constraints – notably power outages and transport bottlenecks – will continue to undermine sales and elevate operating costs, squeezing private sector profits.
Khosa said fading profits will force firms to cut costs, which could involve retrenchments.
“The platinum mining industry appears to have reached this point, with several companies announcing large-scale retrenchments over the next year,” Khosa said.
“Given the country’s structural issues, still subdued global demand, and low commodity prices, employment in agriculture, mining, and manufacturing will likely decline further in 2024. Employment growth in most other sectors, including services, will likely stagnate, but not necessarily reverse course.
“We expect employment growth to soften this year, before picking up more convincingly next year. The unemployment rate will, therefore, remain high.”
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