The alarming unemployment number you should know about

South Africa’s unemployment figures have continued to worsen in recent years as the Covid-19 pandemic has taken its toll – but a long-term view of the labour market provides a clearer idea of the dire unemployment crisis facing the country, says Momentum Investments economist Sanisha Packirisamy.

Speaking to Michael Avery on the latest episode of BusinessTalk, Packirisamy said a recent analysis of Statistics South Africa’s data shows that over the last decade, the number of unemployed people – those people who have left the jobs market and are no longer looking for work – has increased by 70%.

This means that the country is currently sitting with close to 7.6 million people that are not only without a job, but have stopped actively looking for work.

“That is the scale that we are dealing with and it is quite frightening. Covid-19 and its impact on employment creation has also been reasonably negative. Since the beginning of 2019, the private sector shed 1.5 million jobs while the public sector shed around 437,00 jobs.

“So often when we get the state of the nation address where they say we will create 40,000 jobs with new initiatives – we need to look back at the nearly 2 million jobs we have lost since the start of 2019.”

Packirisamy said the country needs to introduce more fundamental reforms to generate employment at scale, including an improved education system as well as a focus on parts of the economy that are the most labour intensive.

She noted that while some of the government’s projects have seen some success, it is not close to the scale needed to sufficiently boost employment.

In his state of the nation address earlier in February, president Cyril Ramaphosa said that the state has a clear role to play in job creation, but it is ultimately the private sector that creates the most jobs.

In South Africa, the number of people employed in the public sector increased from 1.9 million in 2002 to 2.8 million in 2017. Over the same period, the number of people employed in the private sector increased from 8.2 million to 13.5 million.

Record high 

Statistics South Africa was due to publish the country’s latest job figures on Tuesday (22 February), but has pushed the release until March due to data errors.

The Quarterly Labour Force Survey (QFLS) for Q3 2021, published in November 2021, shows the unemployment rate hit a record high on the back of continued lockdown restrictions, load shedding and the July riots.

The results show that the number of employed persons decreased by 660,000 in the third quarter of 2021 to 14.3 million. By comparison, the number of unemployed persons decreased by 183,000 to 7.6 million from second quarter of 2021.

The number of discouraged work-seekers increased by 545,000 (16.4%) and the number of people who were not economically active for reasons other than discouragement increased by 443,000 (3.3%) between the two quarters – resulting in a net increase of 988,000 in the not economically active population.

These changes resulted in the official unemployment rate increasing by 0.5 of a percentage point from 34.4% in the second quarter of 2021 to 34.9% in the third quarter of 2021 – the highest since the start of the QLFS in 2008.

The unemployment rate according to the expanded definition of unemployment increased by 2.2 percentage points to 46.6% over the same period. This is the highest unemployment rate since the start of the QLFS in 2008.

Read: South Africa should look at Chinese-model on jobs: Ramaphosa

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The alarming unemployment number you should know about