President Cyril Ramaphosa applauds as confetti is launched at the end of the results ceremony at the Independent Electoral Commission Results Center in Pretoria, South Africa Saturday, May 11, 2019. South Africa's ruling African National Congress on Saturday marked its weakest victory in national elections in a quarter-century, while Ramaphosa declared that the vote had given him and others "a firm mandate to build a better South Africa for all." (AP Photo/Ben Curtis)
JOHANNESBURG - The mammoth  task facing President-elect Cyril Ramaphosa was yesterday laid bare with first quarter unemployment data reaching a near two year high with the ailing construction industry shedding 146 000 jobs.

Statistics South Africa (Stats SA) said unemployment in the first quarter powered to 27.6 percent from 27.1 percent in the previous quarter.  

Year-on-year the figure was worse than the 26.7 percent recorded during the similar period last year. 

Expanded unemployment that includes people who have stopped looking for work also rose 1 percent higher from 37 percent in the fourth quarter of 2018.

The construction sector has buckled under the slowdown of construction activity largely due to a reduction in infrastructure investment by the public sector in the past few years.
Stats SA said the number of employed persons declined in six of the ten industries between the fourth quarter of 2018 and the quarter in review with the largest decreases in construction which shed 142 000 jobs or 1 577 jobs a day.

The figures mirrored the challenges highlighted by the FNB/Bureau for Economic Research (BER) Civil Confidence Index which said sentiment in the construction sector plunged to its lowest level ever in the first quarter.

FNB economist Siphamandla Mkhwanazi said the industry was likely to shed more jobs in the medium-term.

“All the sub-sectors in the construction industry are under pressure; the biggest pressure comes from a lack of demand due to a constrained fiscus which has seen government cutting back on capital expenditure,” Mkhwanazi said.

“Ideally, the private should be coming in and plug the gap but because of low business confidence, companies have also cut back on infrastructure spending.”

Construction companies have been on their knees since the 2010 infrastructure projects fizzled out. Group Five, once an investor darling, last month filed for bankruptcy.  

Industry giants Basil Read, Esor Construction and Liviero Group applied for business rescue last year.

Stats SA said finance and other business services shed 94 000 jobs in the quarter, while community and social services let go of 50 000 workers.

It said blamed changing behaviour which had seen consumers shifting to digital platforms to do banking.

Standard Bank in March announced its plans to close down 91 branches across the country, which may result in 1 200 people losing their jobs.

The ANC honed in on employment as it sought to woo the electorate ahead of last week’s elections and promised to create 275 000 jobs per year.
South African Chamber of Commerce and Industry chief executive Alan Mukoki said that Ramaphosa needed to appoint ministers who were free of any taint of corruption or nonperformance as this would boost the confidence of business in the new government.

“Businesses would not hesitate to make short, medium and long term investment decisions that create economic growth and jobs, if they have confidence in government,” Mukoki said.

South Africa’s unemployment rate has averaged 25.66 percent from 2000 until 2019 with a record low of 21.50 percent registered in the fourth quarter of 2008.

Investec economist Lara Hordes said the weakening of the country’s economic fundamentals and institutional strengths at a number of its key institutions contributed to depressed investor sentiment and weakened growth.

Hordes said the job losses would aggravate the financial pressure many households were already experiencing. 

“An increase in policy and political certainty post the recent election outcome would, coupled with the mending of structural inefficiencies in the economy, boost confidence levels, driving fixed investment and so therefore sustainable employment” Hordes said.