Unemployment has risen to its highest in two years to 8.4 million.
This means the rate of joblessness in South Africa is expected to remain at historic highs if economic growth is not addressed.
Statistics SA said yesterday the official unemployment rate rose to 33.5% in the second quarter of 2024, up from 32.9% in the first quarter, as more than 92 000 jobs were lost in the three months to June while the labour force continued to expand.
Narrowly defined, this means that one in three of the working-age population in South Africa is now unemployed.
The Quarterly Labour Force Survey (QLFS) from Stats SA showed that the number of unemployed individuals increased by 158 000, reaching 8.4 million, marking the highest figure since comparable records began in 2008.
Statistician-General, Risenga Maluleke, said job losses were recorded in trade, agriculture, private households, construction, and finance.
“According to QLFS results, there was a decrease of 92 000 in the number of employed persons to 16.7 million in the second quarter of 2024, while there was an increase of 158 000 in the number of unemployed to 8.4m compared to the first quarter of 2024,” Maluleke said.
“This resulted in an increase of 66 000 (up by 0.3%) in the labour force in the same period.”
FNB senior economist, Thanda Sithole, said the subdued labour market underscored the challenges posed by weak economic activity.
“The economy remains hampered by structural constraints, with cyclical demand lagging due to significantly constrained consumers. While economic growth is essential for employment gains, our projections indicate that growth will remain just below 2% over the forecast horizon,” Sithole said.
“Nevertheless, modest net employment gains are anticipated, driven by improving business sentiment and growth.”
The expanded definition of unemployment, which includes those discouraged from seeking work, increased by 147 000 to 42.6%, compared to 41.9% in the previous three-month period.
The youth unemployment rate, measuring job-seekers between 15 and 24 years old, picked up to an over one-year high of 60.8% in the second quarter compared to 59.7% in the previous period.
Nedbank economist Johannes (Matimba) Khosa said the outlook for the job market remained uncertain.
Khosa said economic conditions have been improving since the start of the year as some structural constraints have eased somewhat, with load shedding reduced and logistical services improving.
“However, employment in the services industries could remain stagnant as restrictive monetary policy continues to weigh on domestic demand, hurting confidence, constraining consumer spending, and containing fixed investment in the short term,” Khosa said.
“Moreover, some producers might continue to focus on restoring their profit margins, which were depleted by the severe disruptions and surge in operating costs last year. At the same time, public sector employment will remain restricted by government caps on staff numbers to support necessary fiscal consolidation. Consequently, job creation will remain weak in 2024, with employment drifting sideways.”
It is now expected that a more meaningful recovery was likely to occur next year as inflation dips towards 4.5% and the SA Reserve Bank reduces interest rates more significantly, creating space for faster growth in domestic demand and job creation.
North-West University Business School economist, Prof Raymond Parsons, said the unemployment figures again reinforced the urgency outlined by the Government of National Unity (GNU) for South Africa to prioritise much higher inclusive, job-rich growth.
“However, it also reinforces the need to expedite those structural economic reforms that will turn the South African economy around sooner rather than later and put it on a much higher growth trajectory,” Parsons said.
“Current forecasts of about 1.0% GDP growth this year are simply not good enough. The prevailing bad news on the unemployment front can, therefore, only be converted to better news in future if the economic remedies South Africa needs are given high priority.”
BUSINESS REPORT