Bad news for employment in South Africa

Economists warn that South Africa’s employment data next week is likely to be bad news, as the country’s economy continues to underperform, and an influx of fresh graduates floods into the workforce.

Stats SA is scheduled to publish the latest Quarterly Labour Force Survey (QLFS) next week.

The previous survey showed a slight improvement in South Africa’s employment landscape, reflecting the final months of 2024, where seasonal hiring often lifts.

The report showed that there was an increase of 132,000 in the number of employed persons in South Africa to 17.1 million in Q4 2024.

This resulted in the official unemployment rate decreasing by 0.2 percentage points from 32.1% in Q3 2024 to 31.9% in the fourth quarter of 2024.

However, economists expect the trend to reverse in the first quarter of 2025, with the Bureau for Economic Research (BER) pointing out that the period sees an influx of fresh graduates.

“The entry of school-leavers to the labour market during a quarter, when many seasonal festive season jobs are shed, often means a lift in the unemployment rate in Q1,” it said.

Economists at Nedbank echoed this, adding that employment is expected to deteriorate due to the sluggish economy failing to absorb the growing labour force.

With economic growth expected to be hit by poor performances in manufacturing and mining, there are simply not many positive prospects for job creation in the country.

“At the same time, uncertainty increased significantly due to the dramatic rise in US tariffs and the disagreements within the GNU,” Nedbank said.

“The unsettled environment will likely convince companies to adopt a wait-and-see approach in the short term before rushing to expand operations.”

South Africa needs growth for jobs

South Africa is in desperate need of stronger economic growth to drive job creation in the country, but is struggling shift the dial in any meaningful way.

President Cyril Ramaphosa this week announced the launch of phase 2 of Operation Vulindlela—a massive reform programme that aims to push the country to over 3% growth by the end of the decade.

However, economists at the BER have flagged issues with the lofty ambitions, such as many of the reforms from phase 1 of the project still being a work-in-progress with more now added to the pile.

If all the planned reforms could be perfectly executed in an environment free of internal and external disruption, in theory, South Africa could achieve 3% growth and more.

Unfortunately, the reality is that the country’s economic prospects in the near and medium term do not match this outlook.

Instead, South Africa’s growth prospects for 2025 and 2026 have already been slashed from the path toward 2% growth.

Most economists and finance groups estimate GDP growth of between 1% and 1.5% in 2025, which is the same range that South Africa’s population growth sits in.

In GDP per capita terms, the country is stagnating or getting poorer.

Critical sectors like mining are in recession, and various local and international policies and political positions are putting even more jobs at risk.

For example, the United States’ tariff war has led to global growth prospects being slashed.

The Trump administration’s disdain for trade imbalances also puts key acts, like preferential access to US markets through AGOA, at risk.

Should South Africa lose access to AGOA—which is likely—thousands of jobs in the agicultural and automotive sector will be threatened.

Economists have urged the government to get ahead of the coming pain and work to diversify South Africa’s trade relations so the impact of the likely loss can be mitigated.

They have also urged a stronger commitment to the reforms needed to grow the economy and boost job creation.