South Africa’s unemployment rate climbs to 30.1%

Stats SA has published its latest Quarterly Labour Force Survey for the three months to March 2020, revealing that the country’s unemployment rate rose in the first quarter of the year.

According to Stats SA, the official unemployment rate increased by 1.0 percentage point to 30.1% in the first quarter of 2020 compared to the fourth quarter of 2019.

The number of employed persons decreased by 38,000 to 16.4 million and the number of unemployed persons increased by 344,000 to 7.1 million in Q1: 2020 compared to Q4: 2019, resulting in an increase of 306,000 in the labour force.

The largest employment decreases were observed in the formal sector (50,000), followed by the agricultural sector with 21,000 in Q1: 2020.

On the other hand, employment in the informal sector and private households increased by 3,000 and 30,000 respectively.

Between Q4: 2019 and Q1: 2020, the number of employed persons decreased in seven of the 10 industries, with the largest decline recorded in finance (50,000), followed by community and social services (33,000) and agriculture (21 000). Increases in employment were recorded in the trade (71,000), private households (30,000) and mining (6,000) industries.

Compared to the same period last year, a net increase of 91,000 in total employment in Q1: 2020 was largely due to gains in the number of people employed in the Community and social services (185,000), agriculture (27,000), mining (18,000), and private households (15,000) industries.

Employment losses were recorded in the manufacturing (74,000), utilities (34,000), transport (30,000) and trade (25,000) industries during the same period.

Calm before the storm?

While the latest unemployment data shows the country worse off than at the end of 2019, things are expected to get much worse.

The QLFS represents labour force data to March 2020, the period before the nationwide coronavirus lockdown came into effect.

The lockdown, which shut down large parts of the economy for five weeks, and continues to keep smaller sectors locked down even today, is expected to have an extremely negative impact on jobs in the country.

In his letter to the nation this week, president Cyril Ramaphosa said that South Africa faces a difficult road ahead following the outbreak of Covid-19, and has called for the country’s citizens to be realistic about future prospects – especially about the time it will take for the economy to recover.

The president said that the economy is now ‘in the throes of the anticipated fallout from this global crisis’ and that the predictions of businesses shutting down and jobs being lost are materialising.

“Last week, a number of companies announced plans to retrench staff. From aviation to construction, from entertainment and leisure to hospitality, companies have indicated their intention to retrench staff because of heavy losses incurred over the past three months.

“In other cases, businesses are closing permanently. Small businesses whose turnover has been wiped out will be even harder hit.”

Analysts, economists and groups like the Reserve Bank have all warned of a jobs bloodbath in the country, with predictions putting South Africa’s post-coronavirus unemployment rate as high as 50%.

National Treasury forecasts that the impact of the virus, and resulting lockdown period, could lead to job losses of between 690,000 and 1.79 million. Nedbank meanwhile, forecasts that 1.6 million jobs will be shed in the country in 2020, with the bulk of the jobs lost in the first half of the year.

Over the last few weeks, the effects of the lockdown have already been felt, with big companies like Sasol, Edcon, SAA, Comair, and Bidvest Group subsidiary, BidAir all reportedly announcing retrenchments.

Read: Ramaphosa warns of job losses: ‘We have to be realistic about our prospects’