Stats SA releases disastrous unemployment figures
Publish date: 12 February 2020
Issue Number: 322
Diary: Legalbrief Workplace
In the fourth quarter of 2019, SA’s unemployment rate remained unchanged at the nose-bleed level of 29.1%. A Daily Maverick report says that according to data released by Statistics SA, the agency’s wider definition of unemployment, which includes people who have thrown in the towel and stopped the fruitless search for work, was 38.7%, up a notch from 38.5% in Q3. The report says even that definition probably understates the sheer scale of the problem. There are plenty of subsistence farmers in rural areas who have never looked for a job in the first place. Other data released yesterday bodes ill for employment too. Stats SA said manufacturing production fell 5.9% year-on-year in December, its biggest decline since July 2014. Worryingly, the report says, output in the motor vehicle sector – regarded as a job maker – plunged almost 25%. The International Monetary Fund (IMF) recently noted SA’s jobless figures were high even by emerging market standards. Commentators often say that among other things, SA needs policies that generate employment for the unskilled. ‘Creating more low-skilled jobs to improve labour force participation, especially in the poorest provinces, will spur inclusion,’ the IMF recently said. The report says Stats SA’s data bears this out. Of the 6.7m persons officially considered ‘unemployed’, 55.9% did not have a matric.
The latest data comes nearly 13 months after the government’s jobs summit and 17 months after the release of Ramaphosa’s economic stimulus and recovery plan, say PwC economists Lullu Krugel and Christie Viljoen in a Business Day report. ‘Clearly, neither endeavour has had a real positive impact on the country’s employment creation,’ they said.
Speaking after the release of the data, Steel and Engineering Industries Federation of Southern Africa economist Marique Kruger said: ‘The nondescript aggregate unemployment is disconcerting as it has deeper socio-economic implications for the broader economy. The unemployment challenge is becoming very persistent and, together with increasing inequality – captured by the Gini coefficient of 0.63 – existing levels of poverty in SA, making it difficult for existing government policies and interventions to be effective.’ And, Polity reports, First National Bank noted its dismay particularly around the informal sector losing jobs. The bank said this sector outpaced the formal sector for three years up to the fourth quarter last year, which helped to keep employment above water. PwC highlighted its concern around the 159 000 jobs lost in the (wholesale and retail) trade sector, which usually sees an increase in jobs in the fourth quarter each year – considering increases in Black Friday and festive season staff. The firm stated that, clearly, neither the Jobs Summit 13 months ago, nor the economic stimulus plan launched 17 months ago, had a real positive impact on the country's employment creation. ‘President Cyril Ramaphosa has a lot to answer for during the upcoming State of the Nation address later this week.’
SA’s power cuts hurt the economy in the fourth quarter, and two data points yesterday showed just how bad it was, says a Moneyweb report. Production by SA manufacturers fell the most in five-and-a-half years in December. And for the first time in at least 11 years, the unemployment rate didn’t fall in the fourth quarter. ‘We are now seeing how the Eskom problems are starting to show up in the official data,’ said Jacques Nel, an economist at NKC African Economics. The jobless number is ‘a sign of how weak the economy is: business confidence is bad, consumer confidence is in negative territory and growth remains weak,’ said Christie Viljoen, an economist at PwC. What Bloomberg’s Africa economist, Boingotlo Gasealahwe says: ‘It is an Eskom story, but also one of weak domestic demand. That miners and manufacturers were forced to shut their operations earlier than expected certainly contributed to the decline. However, the sharp decline in motor vehicles underscores the weak demand environment.’
Commenting on the number of discouraged job-seekers, labour economist at the University of Johannesburg, Gerhardus Van Zyl said in a Mail & Guardian report that the numbers show that the private sector is not investing in additional productive capacity to absorb more workers. Additionally, he said urgent policy reforms were needed to stimulate growth to spur job creation. Van Zyl noted that the ‘government was in no financial position to create jobs’, and added that ‘the only solution’ is to focus on the small business sector and, in so doing, bring in a greater amount of foreign direct investment.
Every week, The Economist publishes a page that ranks countries in terms of GDP, inflation, current account balance, budget balance, interest rate and currency units. And, writes John Dludlu, executive for strategy and public affairs at the Small Business Institute, in a Business Day report, thirty years since Madiba walked out of prison, it is dispiriting that SA is ranked last in the list of 42 countries surveyed. The third column in the table is the most depressing: unemployment. Even with the charitable measure of joblessness, which merely documents those out of work but still looking, SA fares poorly. At 29.1%, SA has the highest unemployment among the countries on the page, above Spain’s 13.7%, Turkey’s 13.4% and Brazil’s 11%. According to Stats SA, youths aged 15-24 are the most vulnerable in the labour market. The unemployment rate among this age group was 55.2% in the first quarter of 2019. Credible forecasts suggest the picture won’t likely improve in the short to medium term. Answering his question what’s to be done, Dludlu writes that a start would be for Ramaphosa to declare youth unemployment a national emergency when he addresses the nation tomorrow, and focus minds on this crisis. Unfortunately, he writes, as happened in the mid-1980s, it has been left to business, as part of civil society, to seize the initiative to eliminate by far the biggest threat to social stability since 1994.