Unemployment in South Africa has likely reached its high point: economists

Statistics South Africa will release its Q1 Quarterly Labour Force Survey on Tuesday (1 June), with the results likely to be grim as the country continues to feel the knock-on effects of the Covid-19 lockdown, say economists at Nedbank.

The bank forecasts the labour market to reach its worst point this quarter, with employment levels gradually picking up over the remainder of the year, it said in a research note on Monday,

“By the narrow definition, the unemployment rate will probably reach nearly 33% over the reporting period,” it said.

“Trade for April and vehicle sales for May will be released on Tuesday. Vehicle sales are forecast to normalise in May from reduced trading days and sales in April.”

The Q4 2020 QLFS published by StatsSA in February showed that South Africa’s unemployment rate had hit its highest point since the survey was first started.

The data shows that around one million people moved from the ‘not economically active’ segment of the population – which is broadly defined, but includes those who lost work during the Covid-19 lockdown – back into the workforce.

The current unemployment rate stands at 32.5%. This number is significantly higher when considering the expanded unemployment rate, which factors in people in education or training, This accounted for 17.1 million South Africans in Q4 2020.

Second wave knock-on effects

The second wave of infections and associated lockdown at the start of 2021 led to net job losses with significant labour market churn, according to the latest National Income Dynamics Coronavirus Rapid Mobile Survey (NIDS-CRAM).

The NIDS-CRAM is a study conducted by a national consortium of 30 social science researchers from local universities, as well as groups like the Human Sciences Research Council and the Department of Education.

The latest survey, published on 12 May, shows that between October 2020 and January 2021 there was still significant churning in the labour market with about one-fifth of those employed in October not employed in January, and about a fifth of those not employed in October finding work in January.

Rates of job finding among the non-employed were similar across age groups, while job loss was strongly and negatively correlated with age.

Read: Latest lockdown a ‘light touch’ from government – but things could still get worse, economists warn

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Unemployment in South Africa has likely reached its high point: economists