This worrying unemployment trend is just getting worse

 ·22 May 2023

While South Africa’s unemployment rate remains unacceptably high, another worrying trend has emerged over the last decade: those without work are getting stuck there for even longer.

This was one of the more harrowing details to emerge from the latest Quarterly Labour Force Survey from Stats SA.

According to the stats body, the number of unemployed people in the country amounted to 4.9 million in the first quarter of 2013. By Q1 2023, this had grown to 7.9 million people without work – an increase of %.

Over the same time, however, the proportion of the unemployed population categorised as “long-term unemployed” has increased significantly – from 65.5% in 2013 to 77.2% in 2023.

Put another way, the number of long-term unemployed persons has almost doubled, from 3.2 million in 2013 to 6.1 million in 2023.

Long-term unemployed is defined as someone who has been without work for a year or longer.

The emerging trendline over the last decade shows that the figure has only increased over time, illustrating South Africa’s long-term unemployment issues. The only exception to this was during the Covid-19 pandemic in early 2022, which disrupted the trend.

Given the state of long-term unemployment in South Africa, the national government has drawn criticism for focusing on the ‘strict’ or narrow definition of unemployment when reporting its figures.

Economists and analysts have noted that the reality is that job prospects in the country are so bleak that it’s likely more accurate to point to the broader definition – which includes those who have given up hope and are no longer seeking work – as more reflective of the job market.

In the latest report, the expanded unemployment rate recovered slightly to 42.4% (11.9 million people unemployed) compared to the strict rate of 32.9%

In the expanded definition, approximately 3.3 million unemployed people are described as discouraged work seekers.

According to Investec chief economist Annabel Bishop, the expanded unemployment rate demonstrates the extent of South Africa’s dire unemployment situation.

“Consumers are highly constrained; the cost of living has spiralled with inflation proving sticky, while the indebted have to contend with markedly higher interest rates with a further hike expected at (this) week’s MPC meeting.”

The long-term impact of South Africa’s embattled job market is also apparent across the board – including with factors like education levels.

It has become increasingly more difficult to find work in the country, no matter how qualified job seekers are.

According to Stats SA, graduate unemployment has grown from 5.5% in 2013 to 10.6% in 2023. The same trend has emerged for those with other tertiary qualifications – increasing from 11.9% in 2013 to 23.5% in 2023.

Over the same period, the overall labour force participation rate – the proportion of the working-age population either employed or unemployed – has increased, while the absorption rate – the proportion that is employed – has decreased quite significantly.

According to economists at Nedbank, the path forward is not optimistic.

Commenting on the latest unemployment statistics, the group said that the South African economy faces many headwinds in 2023, “which does not bode well for the job market”.

“Slower demand in most major economies, hurt by the high cost of living, will exert downward pressure on commodity prices and weigh on export-orientated industries such as mining and manufacturing. Unfortunately, those two industries are also power intensive and will suffer the most pain from the electricity crisis,” it said.

The bank said that employment by the government would be limited by the fiscal consolidation path, which, among other key objectives, prioritises the reduction of the wage bill. Treasury has already indicated that significant trade-offs will have to be made in job opportunities, given the sector’s current path of wage negotiations.

“Added to this, the number of unemployed and discouraged work seekers who can enter the job market remains high, so even if employment were to increase, the unemployment rate is likely to remain structurally high over the medium term,” the bank said.

Read: Even with a degree, South Africans can’t find a job

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