EMPLOYMENT recovery in South Africa has been forecast to remain clouded by prevailing economic uncertainty, in spite of the rate of joblessness softening near to pre-Covid levels in the three months ended June buoyed by the construction sector.
Data from Statistics South Africa (StatsSA) yesterday showed that the unemployment rate eased by 0.3 percentage points to 32.6% in the second quarter of 2023, down from 32.9% recorded in the first quarter.
This unemployment figure was slightly lower than market expectations and the lowest rate since the first quarter of 2021.
According to StatsSA’s Quarterly Labour Force Survey (QLFS), there were 40.7 million people of working age in South Africa, with the labour force increasing by 143 000 to 24.3 million while 16.5 million were not economically active.
The QLFS showed that the number of unemployed persons decreased by 11 000 to 7.921 million, and employment went up by 154 000 to 16.346 million during the three months to June.
This number of employed has almost reached pre-Covid levels of 16.4 million, and was the 7th consecutive increase since the fourth quarter of 2021.
Statistician-General Risenga Maluleke said the economy gained jobs compared to the previous three months “We are inching closer to preCovid levels (where) we were sitting at 16.4 million people. In terms of the unemployed, we went fewer by 11 000 jobs which remained unchanged from the previous quarter in terms of unemployed people sitting at 7.9 million,” Maluleke said.
StatsSA said employment increases were mainly in construction, trade, and community and social services industries.
The construction sector added the most quarterly jobs in the three months to June at 103 815 quarter-on-quarter, and a modest annual gain of 127 572 jobs.
Wholesale and retail trade, motor trade, hotels and restaurants gained 91 746 jobs between the two quarters, and 197 714 jobs year-on-year, while community and social services gained 62 830 jobs and 143 688 jobs, respectively.
However, the manufacturing sector shed the most jobs at 96 260 undermined by load shedding and other logistical constraints.
This was followed by financial intermediation, insurance, real estate and business services, which shed 68 066 jobs, and transport, storage and communication sector which lost 6 504 jobs in the quarter.
FNB senior economist Thanda Sithole said despite a moderate fall in 2Q23, the official unemployment rate remained stubbornly high and above the pre-pandemic average of 25.5% Sithole said the domestic labour market has shown signs of resilience, adding over 2 million jobs since the fourth quarter of 2021.
However, the prevailing economic weakness alongside the dynamic impact of load shedding poses a downside risk to the ongoing labour market momentum,” Sithole said.
“The domestic economy is expected to stagnate at 0.2% this year, following 1.9% growth in 2022, before gradually recovering 1.8% by 2025. More employment gains are required to reduce the unemployment rate amid a growing population. Combined with human capital investments, this will be key in lifting potential growth in the long run.”
According to StatsSA, the expanded definition of unemployment, which includes those discouraged from seeking work, was 42.1% in the second quarter, down from a prior 42.4% the previous quarter.
The youth remained vulnerable in the labour market, with the total number of unemployed youth (15 to 34 years) decreased by 131 000 to 4.7 million while there was an increase of 105 000 in the number of employed youth to 5.7 million during the same period.
This resulted in a decrease in youth unemployment rate by 1.1 percentage points to 45.3% in the second quarter of 2023.
What was also worrying was that StatsSA said the number of unemployed people in South Africa increased by 2.9 million in a decade, from 5 million in the second quarter of 2013 to 7.9 million in the second quarter of 2023.
Nedbank economist Johannes Khosa said the underlying conditions in the job market remained poor and the outlook was uncertain as the economy still faces significant headwinds, which could affect employment adversely.
Khosa said the private sector will likely remain hesitant to expand production capacity in the short term, limiting the upside for employment growth while employment by the government will be limited by the fiscal consolidation path which prioritises the reduction of the wage bill.
“The labour force will continue to expand given large pools of new entrants, the unemployed and discouraged workers,” Khosa said.
“Therefore, the unemployment rate is likely to remain structurally high over the medium term and can only be reduced through robust economic growth, which ultimately requires faster implementation of critical economic reforms.”
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