eBusiness Weekly
In a presentation on Tuesday, Statistician-General and head of Statistics South Africa (Stats SA) Risenga Maluleke noted that the unemployment rate in SA has declined for the fourth consecutive quarter, this time from 32,9 percent to 32,7 percent.
Unfortunately, Maluleke’s presentation included a slide disclosing that the total number of people without gainful employment increased — and is significantly higher — than 10 years ago.
“The number of unemployed people in SA increased from 4,7 million in the fourth quarter of 2012 to 7,8 million in quarter four of 2022,” says Maluleke, noting that most of these people are facing long-term unemployment, rather than temporary.
“The proportion of those in long-term unemployment increased from 68,2 percent in 2012 to 78,3 percent in 2022.”
Stats SA defines long-term unemployment as applying to those among the unemployed who have been without work and trying to find a job or start a business for one year or more.
This indicates that more than 5,3 million people in SA have been unemployed for at least a year, presumably dependent on friends, family, social grants, begging or criminal activities.
Maluleke’s figure of 7,8 million unemployed people also excludes the more than 3,3 million discouraged work seekers.
In fact, there are nearly 11,12 million unemployed people in SA, compared with 6,76 million at the end of 2012 (also including discouraged work seekers).
It seems fair to use the expanded definition of unemployment rather than the “official unemployment” figure when looking at SA’s unemployment crisis, given the very strict definition of discouraged work seekers.
“A discouraged work seeker is a person who was not employed during the reference period, wanted to work, was available to work or start a business, but did not take active steps to find work during the last four weeks.”
Four weeks is a very short time not to be out looking for work, considering two thirds of the unemployed have been in that position for longer than a year.
The definition also requires those who were not out looking for work to indicate during the quarterly survey that they had given up looking for work because: there were no jobs available in the area; they were unable to find work requiring their skills; or they’d lost hope of finding work of any kind.
Employment still below pre-pandemic levels
FNB senior economist Thanda Sithole says the StatsSA survey discloses that employment is still below pre-Covid-19 levels.
There are still nearly half a million fewer jobs in SA today than at the end of 2019. The formal sector is still showing a loss of 353 778 jobs, private households 131 997 and agriculture 24 965.
The informal sector is above the 2019 levels, having added 37 204 jobs, indicating that people are taking desperate action because they simply couldn’t find new jobs.
“Nevertheless, it is encouraging that the labour market has gained momentum over the past five quarters,” says Sithole.
Perspective
In a nutshell, the number of unemployed people in SA has increased by 64.5 percent in the last decade.
The ranks of the employed — those paying income tax, value-added tax and excise duties to provide services for all — increased by only 17 percent, rising from 13,58 million in 2012 to 15,93 million at the end of 2022.
The 10-year period saw South Africa create fewer than 2,4 million jobs — and nearly 4,4 million more unemployed people.
Little hope for the unemployed
Nedbank economist Johannes Khosa says the outlook for the job market remains uncertain, as the economy faces significant headwinds on the local and global front.
“Most of the key indicators suggest that economic conditions (will have) worsened in the first quarter of 2023, with little improvement expected for the remainder of the year.
“Globally, the cost-of-living crisis continues to dampen consumer spending in major countries and exert pressure on commodity prices,” says Khosa.
“This will weigh on export-orientated industries such as the mining and manufacturing sectors.”
Further, as these two industries are power-intensive, they’ll suffer the most pain from the power supply crisis.
“Other industries are also facing the same fate, with business activity affected by the intense load shedding,” he says.
“At the same time, higher interest rates and fragile consumer confidence will contain consumer spending and hurt corporate profits.”
Khosa believes that although government is accelerating efforts to deal with the issues at Eskom, the problems will take years to resolve.
“At the same time, the pace of implementation of measures to resolve the other key impediments to economic growth has been slow. These include corruption, skills shortages, policy challenges, and deteriorating logistical networks.
“Under these circumstances, business confidence will remain depressed, and the private sector will most likely limit investment spending and employment growth.
“Employment by the government will be limited by the fiscal consolidation path, which, among other key objectives, prioritises the reduction of the wage bill,” says Khosa.
Nedbank says the number of unemployed and discouraged work seekers who can enter the job market remains high. In effect, even if new jobs do open up, the unemployment rate is likely to remain structurally high over the medium term.
It adds that the greatest and most immediate threat is load shedding, which could destroy jobs directly by reducing trading hours and therefore turnover. Smaller businesses are particularly vulnerable.
Load shedding can also destroy jobs indirectly, further raising the cost of production by forcing firms to acquire — and run — alternative energy sources such as generators. Low-margin, high-volume businesses are most vulnerable on this front.
“We expect the recovery in employment to be stymied by the prevailing domestic and global headwinds.
“These include slowing global growth, persistent load shedding at a higher intensity, depressed business confidence and a subdued level of investment (9,9 percent of GDP) that remains significantly below the National Development Plan’s target of 20 percent of GDP by 2030,” says Sithole.
Banks still hopeful
However, both banks remains optimistic that SA can overcome the unemployment problem, given sustained economic growth, among other things.
Sithole believes the solution for new employment opportunities is sustained economic growth above 3 percent per annum. “We expect the recovery in employment to continue, albeit protracted, especially given the prevailing domestic and global headwinds. The domestic economy is expected to grow only moderately, by 0,4 percent this year, from 2,4 percent in 2022, before a gradual recovery to 1.6 percent by 2025.”
He adds that private sector energy-related investment should support employment recovery over the medium term.
Khosa too calls for more support for the private sector.
“The government should make the business environment conducive for the private sector to operate and invest [in] by reducing operational costs, bureaucratic processes and (by eliminating) corruption.
“Support of SMMEs (small, medium and micro-sized enterprises) and other labour-intensive industries that cater to the most vulnerable part of the labour force, such as the unskilled workers and school leavers, is also essential.” — Moneyweb
