Bad news for jobs in South Africa: Nedbank

Most key indicators suggest that South Africa’s economy is slowly mending – however, the pace of recovery has been too slow to translate into sustainable employment creation, says Nedbank.

In a research note focusing on the country’s latest Q4 unemployment data, Nedbank said this slow pace of recovery means the outlook for South Africa’s job market remains uncertain.

The unemployment rate rose to a new record high of 35.3% as a large number of discouraged job seekers returned to the labour force on signs of improved economic activity, outpacing the number of jobs on offer.

While economic activity rebounded in the final quarter after being interrupted by multiple shocks in the third quarter, business confidence remained depressed due to slow economic reforms and persistent power shortages, convincing companies not to rush to expand capacity.

“The worst of the pandemic seems to be over, which implies that lockdown disruptions would be minimal. This, together with ongoing economic reforms, should lift business confidence, encourage investment spending, and ultimately support employment growth,” the bank said.

“However, the unemployment rate will remain structurally high in the short term because the economy is still facing many long-term challenges that are hindering jobs growth.”

Some of the fundamental structural deficiencies, such as electricity shortages and policy challenges, will take years to resolve, which will contain growth in private sector investment, it said.

Employment by the government will be limited by significant budget constraints. A large number of discouraged workers will also increasingly return to the job market as economic activity improves. All these factors will keep the unemployment rate elevated throughout 2022, Nedbank said.

“The annual numbers suggest that the economic recovery has not been strong enough to support employment creation.

“A total of 479,000 jobs were lost in the fourth quarter compared with the same period in 2020, with the highest (724,000) jobs lost in the formal sector, far outweighing a combined 245,000 jobs created in the informal sector, agriculture and private households.”

Read: South Africa is heading towards a 50% unemployment rate: unions

Must Read

Partner Content

Show comments

Trending Now

Follow Us

Bad news for jobs in South Africa: Nedbank