Statistics South Africa (Stats SA) reported on October 29 that South Africa’s unemployment rate increased from 29.0% in 2019 Q2 to 29.1% in the third quarter. This was the highest jobless reading since 2003, and South Africa now has the joint fourth-highest unemployment rate out of 182 countries tracked by Trading Economics.
This is due to no net year-on-year increase in employment over the past year. While agriculture (+4.5% y-o-y) and private households (+1.5% y-o-y) increased their payrolls in 2019 Q3 compared to the same period last year, the decline in formal (-o.4% y-o-y) and informal (-0.7% y-o-y) non-agriculture employment countered these gains. The expanded unemployment rate – i.e. including people who have given up on finding a job – remained at 38.5%.
Secondary and tertiary sectors
On an industry basis, the secondary and tertiary sectors sector suffered many job losses between the second and third quarters of this year. Manufacturing (-30k) jobs, utilities (-18k) and construction (-24k) lost jobs, while from a services perspective there was a net decline in trade (-21k), transport (-8k) and finance (-4k) jobs.
On aggregate, the South African economy added only 62,000 jobs during the third quarter, with agriculture (+38k), mining (+38k), community and social services (+56k) and private households (+35k) making up for losses elsewhere.
Most of the job losses over the past year occurred in the unskilled and semi-skilled trades. Employment in craft and related trade (-106k), amongst plant and machine operators (-39k) and within elementary occupations (-55k) have shown the largest losses.
With skilled workers seeing fewer losses and gains in some areas, the nature of job costs is hitting harder for lower income households – thereby entrenching inequality and poverty.
Employment losses were seen in some of the poorer provinces, including Limpopo (-2.9% y-o-y) and North West (-2.0% y-o-y). In turn, the Free State (+2.7% y-o-y) and KwaZulu-Natal (+1.5% y-o-y) benefited from increases in farm employment.
Source: Stats SA
The latest Stats SA employment data is released nearly 13 months after the government’s Jobs Summit and 14 months after the release of President Cyril Ramaphosa’s economic stimulus and recovery plan.
Clearly, neither endeavour has had a real positive impact on the country’s employment creation. (Media reporting of progress on the part of the Presidential Working Committee on the Jobs Summit has at most reduced the severity of the conundrum.)
The country’s 6.7 million unemployed and 2.8 million discouraged workers – people willing to work but unable to find work in their area or having abandoned searching for a job – are left with few answers as to how the situation will be turned around.
The quality of labour market
The recently released World Economic Forum (WEF) Global Competitiveness Report 2019 ranked South Africa 110th out of 141 countries (i.e. in the bottom quarter) for the quality of labour market policies in helping unemployed people to re-skill and find new employment.
The lack of required skills is a massive issue for the country: the overall skills level of the current workforce is ranked 101st out of 141 countries. Furthermore, based on considerations like critical thinking in teaching and the pupil-to-teacher ratio in primary education, the skills of the country’s future workforce is ranked 109th.
Not surprisingly, the ease of finding skilled employees is ranked 98th out of 141 countries. This helps explain the country’s inability to create jobs: a lack of aptly skilled workers.