Unemployment numbers reflect deepening negative impact of covid-19 lockdown, says SEIFSA

13th November 2020

By: Creamer Media Reporter


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The Quarterly Labour Force Survey (QLFS) released today by Statistics South Africa (Stats SA) reflects the deepening negative impact of the national lockdown put in place to curb the COVID-19 pandemic, as well as the overall depressed economic environment across major economic sectors, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.

The QLFS data shows that South Africa's unemployment rate rose to 30.8% in the third quarter of 2020, up from 23.3% in the previous period. It is the highest jobless rate since quarterly data became available in 2008 and comes amid the ongoing pandemic lockdown, which has contributed to the depressed economic environment.

The data indicates that the number of unemployed people rose by 2.2-million to 6.5-million when compared to the second quarter of 2020. Key to note are the yearly net job losses observed in trade (400,000), manufacturing (300,000), community and social services (298,000) and construction (259,000).

SEIFSA Chief Economist Chifipa Mhango expressed concern about the job-loss trend, which he said “demonstrates lack of business activity. He said it was important that job creation was as a consolidated effort by both the Government and the private sector in order to ensure economic recovery.

Mr Mhango said recent available data for the third quarter of 2020 suggests that the economic scenario remains bleak, following the record GDP contraction in the second quarter of 2020 due to the pandemic. He said although the drop in manufacturing output and retail sales had eased from the second quarter, largely reflecting the gradual lifting of restrictions, it was still relatively steep. The manufacturing Purchasing Managers’ Index (PMI) remained mired in contractionary territory in the quarter, as did business confidence, which weighed negatively on investment activity.

Mr Mhango noted that in recent months there were signs of improvement in overall business confidence levels, and that from an M&E industry perspective, the PMI’s return to expansionary territory for the first time in 18 months, coupled with a softening decline in manufacturing output, was encouraging news.

“We expect the South African economy to rebound in 2021 as economic activity gradually recovers amid further easing of the lockdown. However, as can be seen in several European countries and the UK, which are experiencing a second wave of the COVID-19 virus, South Africans will need to be cautious and adhere to hygiene and social distancing protocols in order to ensure that the virus remains suppressed if the current recovery is to be sustained,” he said.

“The contribution of the M&E sector to overall employment remains key for the South African economy. However, persistent challenges faced by businesses in the sector, such as high electricity costs as well as disruption in its supply, rising logistics costs and imports amid low capacity utilisation, are likely to weigh negatively on the industry, thus affecting job creation in the overall manufacturing sector. It is, therefore, important that engagements between the Government and the industry on the challenges continue constructively to deal with these challenges,” Mr Mhango concluded.

Edited by Creamer Media Reporter



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