Johannesburg - South Africa’s unemployment rate rose to the highest record as factories, wholesalers and retailers cut jobs.
Figures from Statistics SA showed that the government remained the employer of choice and grew employment in the first quarter by 51 000, while agriculture, despite the current drought, created 16 000 jobs. However, the agency said the jobless rate increased substantially to 26.7 percent in the first quarter from 24.5 percent in the previous three months – the highest since the survey of households began in 2008.
Read: SA's unemployment rate rises
The expanded unemployment rate, which includes those who were available to work but did not look for it, increased by 2.5 percentage points to 36.3 percent between the last quarter of 2015 and the first quarter of 2016.
The number of people without jobs rose 521 000 to 5.71 million and the number of employed dropped 355 000 to 15.66 million, the biggest quarterly drop in at least six years.
“South Africa has not done enough to create jobs,” statistician-general Pali Lehohla told reporters in Pretoria. “Enough is when you’ll see a change in the trend. At the moment there is no indication of a turning point and the economic climate is not helping.”
South Africa’s economy has struggled to increase employment since the 2009 recession.
Kamilla Kaplan, an economist at Investec, said: “Weak economic growth, low commodity prices and low rates of private sector investment have suppressed formal-sector employment growth.”
Jeffrey Schultz, an economist at BNP Paribas Securities, said: “Until the economy gets itself on a stronger growth path, the ability of this economy to create a meaningful number of jobs is going to be curtailed.
“Until such time as we get growth stimulating policy initiatives out there and investments in this economy, the outlook for job creation is looking pretty dire.”
Manufacturing shed 100 000 jobs in the first quarter, employment in the trade industry fell by 119 000 and construction jobs decreased by 77 000.
Stats SA said the economy would probably expand less than 1 percent this year, the slowest since the recession, according to government and and Reserve Bank projections.
In February, the World Bank said South Africa needed annual expansion of 7.2 percent from 2018 to reduce the jobless rate to 6 percent by 2030.
Cosatu said yesterday that the latest unemployment figures showed there had been a massive rise in the unemployment rate, and demanded immediate action from all social partners to avert a catastrophe.
“While these statistics are shocking and depressing, they have confirmed what Cosatu has been saying… that we have a crisis of unemployment and it needs urgent attention,” spokesman Sizwe Pamla said.
Pamla said the federation had been calling for a jobs summit to discuss the retrenchments for a long time without any enthusiasm from government and big business. “This reluctance from these social partners is a sign that both… are in denial about what is going on.”
Meanwhile, Telkom said yesterday that 4 200 employees had accepted early retirement or severance packages in the year to March. The reduction in the workforce had cost a one-time R2.2 billion plus a tax impact of R500 million, the company said. That cut full-year earnings per share by as much as 30 percent, it said.
The job cuts are part of chief executive Sipho Maseko’s effort to reduce the financial burden from Telkom’s older, well-paid workforce while attempting to grow the mobile-data business. The operator had wanted to eliminate 6 000 jobs by July but faced opposition from labour unions.
* Additional reporting by Reuters and Bloomberg
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