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Despite the latest quarterly labour force survey (QLFS) for the third quarter of the year showing a positive turn for the South African jobs crisis – the truth is that things in the country remain far worse than they were before the Covid-19 pandemic.
The QLFS for Q3 2022 was published by Stats SA last week, showing that South Africa’s unemployment rate improved by one percentage point to 32.9% from 33.9% in Q2.
The data shows that the country gained 204,000 between the second and third quarters of 2022, with the total number of persons employed up 1.3% to 15.8 million people.
While there’s no doubt that this is good news for South Africa’s unemployment crisis – with analysis by Bloomberg showing that the country is no longer the worst in the world for unemployment – economists from the Bureau for Economic Research noted on Monday (5 December) that the picture remains bleak.
The unemployment rate of 32.9% overshot expectations from the market that the rate would improve to 33.5% for the quarter, the BER said.
However, the reality remains that the level of total employment remains about 600.000 (4%) below the pre-Covid (2019Q4) situation.
“Also, the employment recovery has lagged that of real GDP,” the economists said.
Employment vs pre-Covid
Manufacturing (+123,000) and trade (+82,000) saw the biggest jumps in employment during Q3, with steep losses in finance (-80,000) and private households (-36,000).
Despite being 600,000 or so jobs in the red since Covid, economists at Nedbank said that easing of the unemployment rate is an encouraging trend, especially since key sectors saw growth amid record levels of load shedding.
“The manufacturing sector created the highest number of jobs, bouncing back significantly from a decline in the second quarter. These gains also occurred amid extensive power disruptions. Employment also increased in construction, trade, and community and social services, but the number of jobs added by these industries was lower than in the second quarter,” Nedbank said.
Further to this, the job market has shown continued improvement in 2022 compared with the same period in 2021, the bank said.
A total of 1.2 million jobs were created over the year to date compared with 742,000 lost over the same period in 2021.
However, the same warning as the BER applies, with the bank noting that general employment conditions remained subdued, with job creation falling short of pre-Covid 19 levels. Nedbank also warned that the outlook for the job market remains uncertain, given the prevailing headwinds.
“Business confidence deteriorated further, with the RMB/BER Business Confidence Index remaining below the neutral 50-level for the sixth consecutive quarter in the fourth quarter, falling to 38 – its lowest since the second quarter of 2021.
“The deterioration reflected a combination of global and local unfavourable factors. Internationally, the key concern is the impact of slowing global growth which will hamper the performance of export-orientated industries,” the bank said.
Locally, adverse labour market conditions, including frequent labour strikes, high wage demands, high inputs costs and power shortages, continue to discourage private sector investment, constraining job creation.
“Meanwhile, the labour force continues to rise, which implies that a meaningful reduction in the unemployment rate will be difficult in the short term. South Africa will only achieve a significant unemployment rate reduction through more robust and sustained economic growth,” it said.
GDP is expected to grow by an annual average rate of around 1.5% from 2022 to 2025 in South Africa, which is too low to reduce the unemployment rate meaningfully, Nedbank said.
The ugly truth lurking inside South Africa’s latest jobs data
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