Unemployment ticks up to 32.6% in first quarter

1st June 2021 By: Marleny Arnoldi - Creamer Media Online Writer

Unemployment ticks up to 32.6% in first quarter

Photo by: Creamer Media

The unemployment rate in South Africa has increased to 32.6% in the first quarter of the year, Statistics South Africa (Stats SA) reports. 

This compares with the unemployment rate of 32.5% in the December quarter.

The results of the Quarterly Labour Force Survey for the first quarter show that the number of employed persons remained almost unchanged at 15-million, recording a slight decrease of 28 000.

The number of unemployed persons was at 7.2-million, increasing by 8 000 compared with the fourth quarter of last year.

The unemployment rate of 32.6% is now at the highest since the inception of the labour force survey in 2008.

The expanded definition of unemployment rate increased to 43.2% in the first quarter of the year, while the youth unemployment rate stood at 46.3%.

The expanded definition includes discouraged work seekers and those having other reasons for not searching for employment opportunities.

The number of discouraged work seekers increased by 201 000, or 6.9%, quarter-on-quarter, while the number of people who were not economically active for reasons other than discouragement decreased by 38 000, or 0.3%, over the two quarters.

The net increase of the non-economically active population was 164 000 in the first quarter of the year.

Moreover, employment in the formal sector increased by 79 000, while informal sector employment decreased by 19 000, private households by 70 000 and agriculture by 18 000.

Stats SA explains that some industries created jobs in the first quarter of the year, while others lost jobs, resulting in a net decline of 28 000 in total employment.

Employment mainly increased in the finance industry, by 215 000; in mining, by 12 000; and manufacturing, by 7 000, while community and social services employment increased by 16 000 and utilities by 16 000.

Job losses were, however, recorded in construction, losing 87 000 jobs in the quarter; trade, losing 84 000 jobs; and transport, losing 40 000 jobs.

About 3.3-million out of 10.2-million young people aged between 15 and 24 years were not in employment, education or training in the first quarter of the year.

The Eastern Cape remains the province with the highest rate of unemployment at 43.8%, followed by the Free State at 35.6% and Gauteng at 34.4%.

Nedbank says the latest statistics came out broadly in line with its expectations. Even though the economy has gained traction in the past months, the momentum has come from increased global demand and the rally in commodity prices.

Domestically, however, high-frequency data suggests that demand remains subdued.

Nedbank comments that businesses will take time to recover from the shock of Level 5 lockdown. "Meaningful job creation will probably only resume once corporate profitability has been restored and balance sheets have been strengthened.

"Government can best boost labour market prospects by speeding up vaccination rates, which would go a long way in helping to improve the conditions in labour-intensive industries such as hospitality and tourism," the bank states.

Worryingly, however, the absorption and labour force participation rates have been on a declining trend for the past two quarters. Added to this, the number of unemployed and discouraged work-seekers remains high, so even if employment were to increase, the unemployment rate is likely to remain structurally high over the medium term.

Trade union Uasa has expressed concern about the "appalling" unemployment rate, calling again on government to intervene and come up with solutions that are tangible.

The Steel and Engineering Industries Federation of Southern Africa notes that the number of jobs lost in key sectors such as construction is worrying. "Investment-driven economic recovery is key and the government needs to promote investor confidence by speedily implementing its economic revival plans, including the R791-billion of public sector infrastructure development over the next three financial years."