South Africa is seeing a lockdown recovery – but the jobs aren’t coming back

Economists at BNP Paribas say that South Africa’s economic outlook is the most concerning among major emerging markets, with the country also falling behind on its vaccine rollout.
In a research note published on Wednesday (10 March), the group said South Africa was beset with large structural weaknesses even before Covid-19, and a struggling job market is likely to weigh heavily on recovery prospects.
“The economy has only managed to recover 40% of the 2.2 million jobs lost at the height of the pandemic,” it said. “As the lockdown measures have been loosened, labour force participation has begun to normalise. However, absorption rates remain more than 4 percentage points below 2019 levels.”
This widening has seen unemployment rates worsen to a record 32.5% in Q4 2020, with the extended unemployment rate at 42.6% when considering the number of people who have dropped out of the workforce.
BNP Paribas said that the lockdown has also had other impacts on the labour market – including an actual drop in wages.
“We should not underestimate the scarring done to the consumer or the time it will take to heal the country’s labour market,” it said. “International Labour Organisation statistics placed South Africa as one of the few emerging markets to experience a real fall in wages in 2020.
“The limited state support to incomes ends in April and could possibly worsen the situation,” it said.
February data from Statistics South Africa shows that the 2.1 million jobs recovered were not all people who were previously employed or returning to work.
Stats SA’s researchers found that these workers only made up around half of the figure, with the rest comprising a mix of people previously unemployed before the pandemic, and new entrants into the market.
This means that approximately 1.8 million previously employed people who lost their jobs over lockdown have still not recovered.
“This suggests substantial churning in the labour market, which no longer looks the same as it did prior to the pandemic-inspired lockdowns,” the researchers said.
President Cyril Ramaphosa has said that there are early signs that South Africa’s economy is bouncing back, but acknowledged that the recovery is likely to be uneven.
Responding to the state of the nation debate in parliament on 18 February, the president cautioned that this risks leaving the country’s most vulnerable behind.
He cited the high degree of turnover in the labour market, which means that those who lost their jobs in April are not necessarily those who gained jobs in October.
“The data also suggests that while the expansion of social grants provided substantial relief to individuals and households last year, hunger has again risen to higher levels than before. This is deeply worrying,” he said.
He said that it demonstrates the need to maintain some of the extraordinary social relief measures government has put in place, and to accelerate its livelihoods support and employment programmes.
“It also highlights the need to move with the greatest speed to restore our most effective social support programmes to full operation, such as the school feeding scheme,” he said.