Unemployment rate in the country is likely to worsen amid strong headwinds
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UNEMPLOYMENT in South Africa is expected to worsen further before the end of the year as the economy continues to face strong headwinds from travel bans, the energy crisis, rising inflation and a looming Covid-19 fourth wave amid the Omicron variant.
Statistics South Africa (Stats SA) released grim figures yesterday showing that unemployment hit new record levels after rising by 0.5 percentage points to 34.9 percent in the third quarter of 2021.
This is the highest unemployment rate in the country in 13 years following another record high of 34.4 percent in the second quarter.
The job losses could have huge implications for the country’s fiscus as the personal income tax base shrinks and household consumer spending becomes constrained, forcing the government to spend more on social security.
Anchor Capital’s investment analyst, Casey Delport, said the latest round of travel bans posed a significant setback to the already vulnerable and critical tourism and services sectors.
“Consequently, the unemployment data are likely to deteriorate further in the fourth quarter of 2021,” Delport said.
“Overall, we expect rising joblessness to increase pressure on the government to extend current relief measures that will further complicate efforts to stabilise public finances.”
The Quarterly Labour Force Survey showed that the turbulent July civil unrest, protracted lockdown restrictions and industrial action had caused a jobs bloodbath.
Statistician-General Risenga Maluleke said 660 000 people lost their jobs during the period, and that the number of discouraged work seekers had increased dramatically by 545 000.
The number of people who were not economically active for reasons other than discouragement rose by 443 000 between the two quarters, with the total of the not economically active population rising to 988 000.
Of most concern was that youth unemployment rose to a staggering 66.5 percent, indicative of the social unrest and pointing to longer-term, structural issues in the economy.
“The hardest hit are young people and black women,” Maluleke said.
The unemployment rate among women rose to 37.3 percent in the third quarter compared to 32.9 percent among men.
According to the expanded definition of unemployment, the real rate of unemployment rose by 2.2 percentage points to 46.6 percent in the third quarter.
With a massive hike pushing the petrol price past R20 per litre from today, consumers are set to suffer a double whammy and struggle during the festive season.
Economist Dawie Roodt said these new increases would add to inflationary pressure on consumer pockets.
“These inflationary pressures could force the SA Reserve Bank to increase interest rates even further. This is coming at an unfortunate time for South Africa,” Roodt said.
StatsSA said all industries experienced job losses between the second and third quarters of 2021, but the financial sector was the saving grace as it gained 138 000 jobs.
Agriculture lost 32 000 jobs in the period after being resilient throughout the lockdown period.
Nedbank senior economist Nicky Weimar said the outlook for the job market remained poor and overall economic conditions were still fragile as business confidence was still depressed.
“Employment is likely to start edging up in 2022 as the economy gathers some pace,” Weimar said.
“However, the return of some discouraged work seekers to the job market will keep the unemployment rate high.”
BUSINESS REPORT ONLINE