South Africa’s unemployment rate increased by 0.5 of a percentage point to 27.6% in the first quarter of this year, Statistics South Africa’s (Stats SA’s) latest Quarterly Labour Force Survey (QLFS) shows.

The increase in the unemployment rate is attributable to a decline of 237 000 in the number of people in employment and an increase of 62 000 in the number of people who were unemployed between the fourth quarter of 2018 and the first quarter of this year.

The South African working age population increased by 149 000 in the period under review, compared with the fourth quarter of 2018. The labour force decreased by 176 000.

The results further indicate that the number of discouraged work seekers increased by 156 000 and the “other not economically active” population by 169 000, resulting in the net increase of 325 000 in the number of those who were not economically active.

In a statement on Tuesday, Investec said the weakening of the country’s economic fundamentals and institutional strength at a number of its key institutions had contributed to depressed investor sentiment and weakened economic growth.

The company said job losses would serve to aggravate the financial pressure many households were already experiencing.

However, it also noted that an increase in policy and political certainty post the recent elections would, coupled with the mending of structural inefficiencies in the economy, boost confidence levels, driving fixed investment and, therefore, also sustainable employment.

Meanwhile, North-West University Business School economist Professor Raymond Parsons commented that although the rise in unemployment was widely expected, it serves as a further wake-up call about the country's economy in the post-election period.

He posited that the worsening unemployment situation is owed majorly to Eskom load-shedding and its negative impact on the economy during the quarter; as well as to some extent to a slowing global economy.

In light of the employment outlook, he emphasised the need for new urgency in the commitments made at the Jobs Summit in October last year and particularly the role of the Presidential Jobs Committee tasked with monitoring progress towards the target set of 275 000 jobs yearly.

However, he indicated that previous well-meaning endeavours had fallen short, and unless overall growth prospects are greatly strengthened, these useful micro measure to intensify job creation will only have a minimal impact.

Therefore, he highlighted the need for the country to break out of its current 'low growth trap' of about 1% and get onto a higher growth path.

According to the QLFS, a decline in employment was observed in all sectors – the formal sector, informal sector, agriculture and private households – during the quarter under review.

The net loss of 237 000 in the number of people in employment was mainly driven by the construction sector, with 142 000, followed by finance with 94 000, community and social services with 50 000, private households with 31 000, mining with 20 000 and agriculture with 12 000.

Investec indicated that the construction sector, which recorded the largest quarterly loss, had muted fixed investment spend, underpinned by weak business confidence levels, which hindered its growth.

Employment gains were recorded in the transport sector, with 59 000, trade with 25 000, utilities with 16 000 and manufacturing with 14 000.

Quarter-on-quarter, the percentage of young persons aged 15 to 24 years who were not in employment, education or training (NEET) increased by 2.1 percentage points to 33.2%, or about 3.4-million people.

Investec lamented that youth unemployment remained dispiritingly high and that it was a priority area for government. Therefore, it noted that the income eligibility thresholds for the employment tax incentive scheme were increased in the 2019 Budget, with Finance Minister Tito Mboweni having highlighted that “jobs for 1.1-million young people are supported by this programme”. 

Additionally, Investec emphasised that education remains key for inclusive growth and job creation, with learning and culture allocated the largest portion of government spending in the national budget.

According to the QLFS, of the 20.3-million young people aged 15 to 34 years, 40.7% were NEETs – an increase of 1.8 percentage points compared with the fourth quarter of 2018.