What to expect from this week’s unemployment numbers

Statistics South Africa is set to release is Labour Force Survey for Q3 2020 on Thursday (12 November), with analysts looking to the job numbers for signs of South Africa’s economic recovery post-lockdown.

The official Quarterly Labour Force Survey (QLFS) figures from StatsSA for Q2 2020 showed that 2.2 million people lost their jobs in South Africa between the first and second quarter of the year.

Because many people without paying work stopped looking for employment during the lockdown period, Stats SA reported the unemployment rate actually falling to 23.3% during the period – a 6.8 percentage point decline from the 30.1% recorded in the previous quarter – however, this was not a full reflection of the job losses experienced under lockdown.

In a research note on Monday (9 November), Nedbank said that StatsSA’s data for the second quarter was unexpected given that the country was in the midst of the strictest portion of the lockdown, which shut down most of the economy.

“The ‘better’ unemployment figure in the second quarter was the result of a shrinkage in the labour force and not the result of an increase in jobs,” Nedbank said.

“In order to forecast the third quarter unemployment rate one would need to have a view on when the labour force will return to normal, something that is very difficult to predict.”

The bank said that it expects households to re-enter the labour force as lockdown measures relax further, and if this happens in the absence of significant job creation – which is likely – the unemployment rate will increase over the next two quarters.

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Using the broader definition of unemployment, which includes people who want paid employment but have given up looking for it, South Africa’s unemployment rate increased by 2.3 percentage points to 42% in Q2.

Research firm Trade & Industrial Policy Strategies (TIPS) said that this employment ratio better underscores the scale of job losses due to the pandemic.

“From 2010 to 2019 South Africa’s employment ratio remained around 40%, but in the second quarter of 2020 it fell to a record low of 36%,” the group said in a note last week.

“That is, just over a third of the country’s adult population said they were employed in the second quarter of 2020.”

TIPS said that the pandemic-related job losses aggravated already low employment levels in the country. According to the World Bank (2019), the global employment ratio was 58% in 2019, down from 62% in the early 1990s.

“Lower-middle-income countries reported a 54% employment ratio, while upper-middle-income countries, which include South Africa, reported an employment ratio of 60%,” it said.

StatsSA’s data shows that the effects of the Covid-19 shock were particularly severe on lower-level workers in high-risk occupations. That means it has deepened the pre-existing inequalities in South Africa’s labour market, TIPS said.


Read: New data shows the make-up of South Africans with jobs

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What to expect from this week’s unemployment numbers