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Very few work seekers will find jobs

While more than 4.3m people entered the labour market over the last year, fewer than 800 000 found jobs.
According to the expanded definition, South Africa’s unemployment rate now stands at 44.4%. Image: Shutterstock

When Statistics SA published its Quarterly Labour Force Survey (QLFS) for the first quarter of 2021, it noted that the unemployment rate had increased to the highest level since it started conducting the survey in 2008.

Read: Unemployment: No light at the end of the tunnel (June 2021)

When the statisticians announced the results of the survey for the second quarter of 2021 on Tuesday (August 24), the figures showed that this quarter was even worse and unemployment set a new record.

“The official unemployment rate increased by 1.8 percentage points from 32.6% in the first quarter of 2021 to 34.4% in the second quarter of 2021 – the highest since the start of the QLFS in 2008,” according to the report. “The unemployment rate according to the expanded definition of unemployment increased to 44.4%.”

The severity of the problem

Unfortunately, even the very high unemployment rate hides the severity of the unemployment problem in SA. A look of the gross numbers paints an even worse picture than the Stats SA report admits to.

The total number of persons of working age (defined as people aged 15 to 64) increased by a reasonable 1.5% over the past year, from around 39 million to some 39.5 million, according to the survey.

However, there was a huge increase in the number of participants in the labour market. The active labour force increased by more than 4.3 million people to 22.2 million compared with 18.4 million a year ago.

Thus, the number of people available to do work and who should arguably work, increased by more than 4.3 million in just 12 months. In contrast, Stats SA found that the economy could only create 793 000 new jobs in that time.

“The number of unemployed persons increased by 82% [3.5 million], while the number of persons who were not economically active decreased by 18.2% or 3.7 million,” noted Stats SA.

This big increase in the number of new entrants to the labour market had Stats SA searching for reasons.

The report notes that special tabulations were done to study movements between labour market categories. “It was observed that a large number of persons moved from the ’employed’ status and ‘not economically active’ to ‘unemployed’ categories between the two quarters.”

Lockdowns

In reality this means that people lost their jobs, while others who previously didn’t have to work had to start looking for jobs to make ends meet during the recent difficult economic circumstances.

Johannes Khosa, specialist economist at Nedbank Group, says that the newest unemployment figures are another indication of the impact the Covid-19 lockdown has had on the economy.

“Companies remained hesitant to hire more people and, in worse situations, they even laid off more workers,” says Khosa.

“As a result, during the quarter more jobs were lost.”

Impact by sector

Khosa points out that the formal sector shed 375 000 jobs during the quarter to June. Employment in the formal sector fell from just less than 15 million jobs to fewer than 14.15 million.

The worst hit was the financial sector, for decades the sector that created many new jobs and good careers for workers of just about any skill level.

Quarter-to-quarter and year-on-year changes in the formal sector by industry

Source: Stats SA

Stats SA noted that employment gains were observed in a few sectors during the recent quarter compared with the previous.

The informal sector created 184 000 new jobs, the agricultural sector 69 000 and private households 67 000.

However, one can argue that the big increase in employment in the informal sector is being driven more by necessity than anything else.

Losing battle

An analysis of the long-term data supplied as an addendum to the QLFS report reinforces the view that SA is losing the battle against unemployment.

The labour force survey – based on surveying households in SA as opposed to the Quarterly Employment Survey (QES), which polls registered companies – shows that the numbers of unemployed have been increasing steadily year after year since the start of the dataset in 2008.

Population, labour force, employed persons and unemployed persons

Source: Stats SA historical data

The population has been growing steadily. Although data from multiple sources show that SA’s population growth is slowing, the labour force is growing faster due to the specific demographics of SA’s rather young population.

Literally hundreds of thousands of young men and women finish school, university and other tertiary education institutions every year and enter the labour force.

It is immediately noticeable from the graph that the increase in employment lags the growth in the labour force. The numbers of the unemployed continue to increase.

The increase in the unemployment rate tells only part of the story

Stats SA notes that one reason for the recent increase in the unemployment rate is an increase in labour force participation rate.

In short, the number of people who want to work is increasing.

Comparing the number of employed people to the population of people of working age gives a rough indication of the total picture. Expressed as a percentage, it shows that the employment of everybody who could work fell from 46% in 2008 to below 38% in 2021 – whatever the reason for not working.

Employment as a percentage of the working age population

Source: Calculation based on Stats SA data

A sharp decline in this ‘overall’ employment is evident after the 2008 financial crisis. Equally noticeable is that this was followed by only a partial recovery. Then Covid-19 hit. Hard.

Outlook

The future doesn’t require sunglasses. As Khosa says, the outlook for the job market remains poor.

“Subdued economic conditions mean it will take long to repair the damage caused by the lockdowns of the economy.” he says.

“An increase in job creation is not going to happen in the short term. Companies are still hesitant to expand operations.”

Khosa adds that the long-term prospects are not that good either.

He mentions that continued power shortages and uncertainty with regards to government policy will continue to impact on business confidence, economic growth and employment.

Read: Will SA ever be able to solve its unemployment problem?

Another factor that will keep the unemployment rate high over the long term is that discouraged work-seekers are bound to re-enter the labour market and start looking for jobs once the economy starts to recover.

Stats SA says there are currently more than 3.3 million discouraged work seekers out there.

Destructive impact of Covid and lockdowns

NWU Business School economist professor Raymond Parsons says the new record high of 34.4% in the SA unemployment rate confirms the destructive impact the Delta variant and accompanying lockdown restrictions have had on the economy and the labour market.

“The outlook for the job market remains weak, as it is clear the full impact on economic activity of the civil unrest in late July will only become apparent in the third quarter of 2021. The total economic costs of the recent violence and civil unrest have not yet fully emerged.

“In these negative circumstances unemployment is now indeed the ‘cruellest tax’ on vulnerable sectors of the population and job creation continues to demand top priority,” says Parsons.

“There is, however, no ‘quick fix’. Given the current uncertainties in the economic outlook, the immediate overall job situation is therefore likely to get worse before it gets better.”

Parsons adds that the latest unemployment figures send a message that the balance between lives and livelihoods in handling the pandemic remains an acute dilemma “which needs to be carefully managed” in future.

The availability of labour should be a boon for any economy.

Unfortunately, it seems to be only a problem for SA.

Listen to Ryk van Niekerk’s interview with UIF spokesperson Makhosonke Buthelezi (or read the transcript here):

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COMMENTS   32

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Yes, and if the ANC introduce this pension for all and we must pay 10 – 12% of our salaries towards this fund the gardeners and housekeepers will be the first to lose their jobs. Tax payers won’t be able to afford them anymore.
One wonders how many of these workers are employed by us?

In reality, BEE killed the Goose that lays the Golden Egg, and will continue doing so

Solution? Self Employment and if you can, employ your family..

Whilst the sun is still shining (thankfully the Comrades cannot steal that) there’s still a lot of hay to be made in SA

I for one employed 120 people in my previous business, of which 75% were BEE

Eventually i was just an agent for SARS..

No more! I now sleep at night

I closed shop, retrenched and moved on

And i was a small player..The day theses idiots realise that SMME’s are a major force ito employment, who need to be nurtured and not milked, perhaps then the tide of unemployment will set course in a new direction!

Until then, nothing will nothing will change..Our hard earned money carries an economy run by looters and thieves whom we didn’t even vote for

“There are none so blind as those who will not see”

So you were the one who nurtured them into corruption instead of hard work. Congratulations you played yourself.

The problem is also one of Ego. To the ANC and its followers, the party can do no wrong. Admitting any fault, mistake or wrong doing is tantamount to admitting failure by the ANC (and the people) to govern. After having fought for emancipation from the Apartheid regime, ego would not allow for any acknowledgement of failure to do a better job than the previous regime.

@ BallinDVersace..Take a minute and think about your dense remark!

What have you done to contribute to anything apart from passing condescending remarks? Have you nothing better to do?

Take a pill and go to bed!

“Môre is nog ‘n dag”

When they introduce the new 10% to 12% Tax for other people’s pensions and social grants I will retire or resign and spend my money travelling Europe and looking for a new job in Europe.

We all know why the economy is closing down.
It was due one party threatening to take away people’s properties and the other due to the corruption by the previous president.
And now the seasonal looting.

And it will only get worse.

What’s astounding against this backdrop is that the ANC is still intent on devising and implementing populist anti-growth and anti-investment policies. As these unemployment numbers show, current thinking on the economy is frighteningly out of touch with reality.

The devastating unemployment situation and recession is what you get with ANC corruption and policies.

Just pay the people to create more babies !!

The subtitle of this article supplies the solution, when it says that only a fraction of new entrants to the job market will find employment. Clearly the problem is too many people chasing too few jobs. SA doesn’t have 40% unemployment, it has 40% too many people – illegal and citizens – who are chasing too few jobs. The only lasting solution would be something like China’s one-child policy, and the deportation of all illegals.

Touché

So will this lead to a decline in the birth rate despite free government sponsored contraception? Me thinks not.

The logic is baffling. This lot kept 30 million people uneducated and now it is the voting fodder that will backfire. My farm domestic took 4 daughters out of school to have babies because the government pays them to have babies. That is the mentality these clowns have created.

Population growth might be 1.5% at present but 20 years ago that was 2.5%. These are the people looking for jobs now not the babies born last year.

Then you have undocumented and documented foreigners taking up thousands of jobs and employers take the risk as South African labour are normally unionist, awkward, lazy, unproductive, violent and all these “Traits” are protected by law.

Then investment (CONTRARY TO THE LIES THE anc AND ITS LEADER PEDDLES) is dwindling at a rapid rate. The reasons are well known. BEE, AA, EE, Transformation etc. When you want locals and “in particular” blacks to own the economy who is to blame when there are no jobs? Whites “in particular” are divesting not because they always want to but the anc transformation policy forces them and the jobs go as well. The new “owners” have no skill and are just someone’s political connection put in place to steal.

So nobody should be surprised especially the jobless. They are all voters and only have themselves to blame. So stop crying you got what you voted for.

Because companies/corporates goals are not aligned with that of society, infact they completely opposite to each other. Not only will people not find work but those that do will earn R8k a month if they lucky. But don’t worry CEOs still make R150k a day

The unemployed cannot find jobs because they ate their jobs. Their employment opportunities went past their stomachs and are stored at the sewage plant now. South Africa, under the ANC regime, is a “developmental state”, or centrally planned socialist economy. The redistribution of property, which includes productive, job-creating assets, is central to this ideology, as is unemployment.

Someone has to invest a substantial amount of money before he is able to create a job opportunity. Take the sector that comprises domestic workers and gardeners, who make out 40% of job opportunities, for instance. Someone has to invest R3 million to R5 million in a residential property before that person will employ someone to help him maintain and run that asset. It is the same for factory- and farm workers. In order to create one job opportunity, some capitalist has to act on incentives and save and invest millions of rands.

The state destroys jobs when it distributes the productive assets of the nation among the unemployed in the townships when the state abuses its power to expropriate and redistribute property through BEE laws, municipal taxes, overpriced services from ineffective SOE monopolies, various direct and indirect taxes, the effect of crime, the restrictive labour laws, inflexible wage demands, and promises of EWC, and the nationalisation of mineral rights and water rights.

The process of retribution and redistribution of the productive assets of the nation put the job-creating capital in the hands of the people in the township where they consumed it as free water and electricity and social grants. They consumed their jobs. The ANC government assisted the unemployed masses to turn their jobs and their future into sewerage. We have a huge unemployment problem on the one hand, while we have a huge oversupply of sewerage on the other hand. That sewage that is leaking from that pipe in front of your shack is your job opportunity that is flowing down the street, my brother. This is the unavoidable consequence of a developmental state and redistribution. This is what social justice and equality look like in practice.

Talk about ideology – Moneyweb missed a massive news development today with our PROUD national airline (yes, the tax guzzler with a dubious safety record) announcing it’s back in operation next month and we can actually start buying tickets as from NOW!

P.S. don’t all rush at the same time!

C’mon Moneyweb, the question on everyone’s lips is how far is that due diligence by the private investor…..acting CEO says it’s in the hands of DPE and there’s no definate date for completion.
Which means; tax payers, be on standby for the next bailout!

This news refutes the nonsense that the winning of a world cup will cause change. Maybe there are a few lessons to be learned from Germany after WW II. Want to find a helping hand; look at the end of your arm.

At the end of most arms in RSA is a begging bowl. If that is not filled it changes to a brick thereafter a panga :
Without education there is no hope : Amandla

OI don’t understand why people are unhappy with the current situation. This is what the masses have voted for. These are their democratically elected leaders who institute their populist policies which have destroyed the economy. It begins to make sense when one considers the track record of Democracy in Africa.

Keep voting ANC, children.

Wait till EWC is approved and applied. Then <34% will have work. And it will happen sooner rather than later.

Brick laying the backbone of this economy. Lmao.

Where did 4.3 million additional entrants to the job market come from in a year?

Also, to blame covid is misleading, the real culprit is the ANC government with its labour destroying policies such as BEE, strict labour legislation, minimum wages and then the draconian lock-down regulations which destroyed entire industries.

Don’t EVER blame Covid; consider the mess and 27% unemployment not including those that gave up looking for jobs, pre-Covid!

Something I am curious about is, I wonder what the economic stress levels for individuals living in South Africa compared to countries like Australia, UK and America are like?

I hear you, but you only need to concern yourself with what you can control. Read the news but don’t let it get to you. I see people here getting themselves worked up about the anc and their destructive behaviour. It’s good to comment, as we learn from others or even teach others, but don’t let it stress you out.

Dr. Pahli Lehola, the past head of Stats SA, covered the explosion in population growth by talking of a “youth dividend”.

The youth dividend only works if the youth can get a good education, find a job, by stuff and pay taxes. Which is not the case.

The unemployment is in formal sector, second world jobs, which can never absorb all the job entrants. In a developing country a much bigger emphasis should be on the informal sector – and here our mainstream economists are at fault.

What is also missed that a large portion of our “employed” ,consist of jobs which are in no way needed ,: for example car guards ,petrol attendants ,bag packets in supermarkets etc etc .We don’t need any of them .

I disagree – it’s helpful for the elderly to have those types of optional services.

Well I’m elderly and all they do is P me off.

With these unemployment numbers and the potential picture of the future prospects of unemployment we still wonder how the masses were motived to take part in the so called “Insurrection” / Mass looting in KZN and Gauteng?
When people are desperate or have given up then they become easily manipulated.
Word to the wise – how long will the masses continue to tolerated this before we eventually run out out of edge to move towards and eventually fall over the edge?

End of comments.

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