South Africa's official jobless rate eased to 23.9 percent of the labour force in the fourth quarter of 2011, from 25.0 percent in the third quarter, a survey showed on Tuesday.
In its latest quarterly Labour Force Survey, Statistics South Africa said the total number of unemployed people stood at 4.244 million in the three months to December from 4.442 million in the third quarter.
The expanded definition of unemployment, which includes people who have stopped looking for work, decreased by 0.6 percentage points to 35.4 percent.
ANALYST COMMENTS
TEBOGO MOSEPELE, ECONOMIST, STANDARD BANK
“The employment data today does not change our interest rate view. Standard Bank reiterates that the SARB's MPC will hold interest rates unchanged until mid-2013. Thereafter, gradual monetary policy normalization is expected.
“While the improvement in the unemployment rate can be viewed as rand positive, we expect the data to have limited impact on the rand's direction. Global sentiment, particularly from the Eurozone debt crisis should continue to have the greatest bearing on the rand's movement over the short-medium-term.”
CHRIS HART, CHIEF ECONOMIST, INVESTMENT SOLUTIONS
“The South African economy is in a phase where you are actually starting to claw back some of the job losses that occurred in the wake of the global financial crisis.
“However, job creation is not happening in abundance or at the rate that could ever hope to materially dent unemployment. We are tinkering in decimal points whereas the substance of unemployment is not really being resolved at all. This economy is not geared to creating jobs because the environment is too hostile for small business.
“Programmes (announced by President Zuma last year) are really mere gestures. They could never ever be a solution to our jobs crisis.
“You'd need to improve savings in households and then cut the regulatory requirements for small businesses, maybe of turnover of two billion rand. There's no one regulation I would single out, there's layers and layers and complexity and costs of the myriad of regulatory requirements.”
MARKET REACTION
The rand was at 7.5570 against the dollar by 11:55 SA time, from 7.558 before the data was released at 11:30 SA time. The yield on the benchmark 2015 government bond was slightly lower at 6.485 percent from 6.495 percent prior to the data.
BACKGROUND
- The government sees unemployment as one of the major challenges for South Africa's economy after a million jobs were lost during a recession in 2009 and have not been recovered.
- Out of nearly 50 million people in South Africa, only about 13.1 million are employed, with only 40 percent of people of working age in a job.
- The government is proposing changes to labour law that are intended to increase job security for temporary workers but economists expect the shake-up will worsen unemployment as it partly ramps up costs for employers.
- The Finance Minister Pravin Gordhan has said the economy needs to grow by 7 percent a year on a sustained basis to make a dent on unemployment, more than double the current rate of 3.1 percent seen for 2011. - Reuters