The unemployment rate that remains doggedly high continues to be a great concern, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.

According to data released by Statistics South Africa (Stats SA) today, both the unemployment and the absorption rates remain unchanged at 29.1% and 42.4% respectively. Officially, the number of employed persons increased by 45 000 to 16.4 million in Q4 2019, while the number of unemployed persons decreased by 8 000 to 6.7 million compared to Q3 2019. However, there was a decrease in the labour force participation rate by 0.1 of a percentage point to 59.8% in the fourth quarter of 2019 when compared to the third quarter of 2019, as more job seekers – 62 000 – became despondent and gave up looking for jobs.

Speaking after the release of the data, SEIFSA Economist Marique Kruger said while the slight decrease in the number of unemployed people is encouraging, nevertheless it had an insignificant dent in reducing the aggregate unemployment numbers, especially judging from the uninspiring unemployment rate.

“The nondescript aggregate unemployment is disconcerting as it has deeper socio-economic implications for the broader economy. The unemployment challenge is becoming very persistent and, together with increasing inequality (captured by the Gini coefficient of 0.63), deepens existing levels of poverty in South Africa, making it difficult for existing government policies and interventions to be effective,” said Ms Kruger.

Declines in employment was recorded in the broader manufacturing sector, including its diverse Metals and Engineering (M&E) sector, with the sector losing 39 000 jobs during the fourth quarter of 2019, representing a 2.2% year-on-year deterioration.

Encouragingly, other key industrial sectors with increased interdependencies with the M&E cluster of industries registered job gains. These include the mining sector, which recorded quarter-on-quarter gains of 11 000 jobs or 2.5%, and the construction sector, which also recorded quarter-on-quarter gains of 12 000 jobs or 0.9%. This is reassuring as it provides impetus for captains of industry to capitalize on and further increase employment opportunities in these sectors, with extended benefits for the M&E sector.

Ms Kruger said that the persistent official unemployment rate highlights the need for continuous incentives to be provided to industrial sectors to boost production and sustainability, which should result in more employment.

“Continuous support for struggling businesses is crucial in these times of stagnant demand and poor business activity in order to reignite growth,” she said.

Ms Kruger said that generally, a change of mindset is necessary to support existing top-down macro-economic initiatives aimed at reducing the high unemployment levels in order to deal with what is increasingly becoming an unemployment scourge.

“For instance, the unemployed can be encouraged by policy makers to seek for business opportunities which could be expeditiously funded, rather than seeking jobs, as evidently the economy’s ability to create jobs is thinning, underpinned by poor demand and real capital spending,” she said.