The financial pressures facing highly indebted South African households were yesterday laid bare after unemployment data from Statistics South Africa (StatsSA) showed that private households shed 48000 thousands jobs in the second quarter as the country's unemployment reached 29 percent in the quarter from 27.6 percent in the prior quarter.
The second quarter's labour print was the highest unemployment rate since 2008 when the stats agency introduced the quarterly labour force survey.
The data suggested that households were letting go of their domestic workers in order to increase their disposable income.
StatsSA employment losses were recorded in the transport sector which bled 42000 jobs, the embattled mining which lost 36000 jobs and finance and other business services which shed 21000 jobs.
FNB economist Siphamandla Mkhwanazi said employment growth in the informal sector had outpaced its formal counterpart for about three years now.
“Moreover, employment in the household sector, such as gardening services, declined by 3.5percent year-on-year, reflective of rising financial pressures in households,” Mkhwanazi said.
“Looking ahead, annual gross domestic product growth is expected to disappoint relative to last year, and this will keep employment growth muted. By extension, this will continue exerting pressure on households’ income and their ability to spend.”
The surge in the prices of water, electricity and other utility costs over the the past few years has squeezed consumers' disposables incomes, which has seen them change their spending patterns to say afloat.
The economy has also not grown above 2percent since 2013 and is expected to grow below 1percent this year after plunging 3.2 percent in the first quarter.
Investec economist Lara Hodes said job losses served to aggravate the financial pressure many households are already experiencing, against a muted economic background.
“In order to see any significant job creation in South Africa, economic growth needs to be ignited, underpinned by effective policy implementation and policy certainty, which are required to restore confidence and enhance the investment climate,” Hodes said.
Data from StatsSA also showed that the unemployment rate had increased by 5.8 percentage points between the second quarter of 2009 to the quarter under review, an increase from 23.2 percent to 29 percent.
The stats gathering agency also said 8.2 million out of 20.4 million young people aged 15 to 34 years, were not in employment or in any institution of learning.
Professor Raymond Parsons of the North West University said rising unemployment was inevitable if growth rates remained below 1percent and if appropriate economic reforms were not implemented.
“The worsening unemployment picture also is a strong reminder that an update is required on the 42 recommendations made at the Jobs Summit in October 2018 and to what extent they have been implemented,” Parsons said.
“In light of the latest unemployment trends in South Africa, more realistic targets for future job creation will now also need to be set.”