SA unemployment escalates to highest on record in 13 years
JOHANNESBURG - THE RAND stabilised at R14.67 against the dollar yesterday following a slight retreat after South Africa’s unemployment rate climbed to a record high in 13 years.
Data from Statistics South Africa (StatsSA) yesterday showed that unemployment increased 1.7 percentage points to an unprecedented 32.5 percent in the fourth quarter of 2020 compared with 30.8 percent in the previous quarter.
This was the highest jobless rate since the start of the Quarterly Labour Force Survey (QLFS) in 2008 as more people entered the labour market and were actively looking for jobs.
Investors have remained cautious over the government’s fiscal consolidation path and commitments to structural reforms.
Anchor Capital’s Nolan Wapenaar said any slippage against their fiscal targets will likely be punished by markets.
“The market is looking for a belttightening effort on the part of the government, which we also believe is the realistic and reasonable option,” Wapenaar said.
“Government finances can only attain stability again with economic growth and any policy that detracts from growth will be met with disappointment.”
The unemployment rate according to the expanded definition of unemployment eased by 0.5 of a percentage point but remained elevated at 42.6 percent.
Investec economist Lara Hodes said the expanded unemployment rate was on levels logged during the same period during the global recession in 2008.
“This reflects South Africa’s dismal labour market predicament, where even before the onset of Covid-19, the country had a very low labour absorption rate by international standards,” Hodes said.
“Covid-19 has had a devastating effect on the economy, leading to many businesses having to shut their doors permanently or decrease their workforce.”
StatsSA said the number of unemployed persons increased by 701 000 to 7.2 million in the third quarter.
The number of discouraged work-seekers shot up by 235 000, while the not economically active population decreased by 890 000.
Compared to a year ago, StatsSA said total employment fell by 1.4m.
However, employment also increased in all sectors and all industries in the fourth quarter compared to the third quarter, except for finance and mining.
Steel and Engineering Industries Federation of SA (Seifsa) chief economist Chifipa Mhango said job creation should be a consolidated effort by both the government and the private sector.
“The repeated trend of jobs being lost in key demand-driving sectors of the metals and engineering sector, such as construction, is worrying as it demonstrates lack of business activity,” Mhango said.
“We expect a national budget package that will provide a stimulus in the form of infrastructure spending, incentives for manufacturing industries both small and large, and a budget that focuses on addressing the challenges of local industries’ lack of competitiveness.”