South Africa’s record high unemployment rate likely to get even worse: Nedbank

Statistics South Africa will publish its latest Quarterly Labour Force Survey (QFLS) on Tuesday (30 November), with South Africa likely to see a worsening unemployment rate, say economists at Nedbank.

The labour metrics are expected to worsen on the back of the July unrests and the still stringent lockdown, it said in a research note on Monday.

The last QLFS published by Stats South Africa in August showed that the country’s unemployment rate had risen to a high of 34.4% – the highest since the start of the QLFS began in 2008.

The unemployment rate, according to the expanded definition of unemployment, increased by 1.2 percentage points to 44.4% in quarter 2 of 2021 compared to the first quarter of 2021.

The results show that the number of employed persons decreased by 54,000 in the second quarter of 2021 to 14.9 million. The number of unemployed persons increased by 584,000 to 7.8 million compared to the first quarter of 2021.

The number of discouraged work-seekers increased by 186,000 (5.9%). The number of people who were not economically active for reasons other than discouragement decreased by 571,000 (4.5%) between the two quarters resulting in a net decrease of 386,000 in the not economically active population.

An old problem 

While Nedbank forecasts that lockdown and the July riots will be the most significant contributors to unemployment, analysts have also warned that South Africa’s worst year of load shedding on record will lead to job cuts.

In an October research note, professional services firm PwC noted that the power outages are one of several domestic challenges that the government will need to address if it hopes to see significant economic growth post-pandemic.

PwC said that its baseline scenario has for some time assumed that power cuts would be back during the fourth quarter. Despite this, the group still expects heavy jobs losses to occur due to the power outages.

“Overall, we expect load shedding to reduce 2021 GDP growth by three percentage points – and cost the country 350,000 in potential jobs,” it said.

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