The unemployment rate in South Africa has eased to its lowest in nearly two years despite economic disruptions caused by acute load shedding that worsened during the last quarter of 2022.
However, economists warned that the outlook for the job market remained uncertain as the economy faced significant headwinds from local and global fronts.
Data from Statistics South Africa (StatsSA) yesterday showed that the rate of unemployment edged down by 0.2% to 32.7% in the fourth quarter of 2022, from 32.9% in the third quarter, the lowest since the first quarter of 2021.
The Quarterly Labour Force Survey (QLFS) revealed that 169 000 jobs were gained in the three months to December 2022, raising the total number of persons employed to 15.9 million.
However, the number of unemployed persons also increased by 28 000 to 7.8m during the same period, while those who were not economically active for reasons other than discouragement increased by 95 000 to 13.4m.
StatsSA said the discouraged work-seekers decreased by 151 000, resulting in a net decrease of 57 000 in the not economically active population.
Statistician-General Risenga Maluleke said it was encouraging that most of the jobs (143 000) were created in the formal sector, while the informal sector recorded job losses.
“We have seen the year 2022 gaining a lot of jobs and we have seen unemployment starting to decline in the year 2022, so it means that we are going back to our pre-Covid levels although you will recall in the second quarter of the year 2020, we lost about 2 million jobs,” Maluleke said.
“We were sitting at 16 million jobs before Covid, and we still have not recovered from that. We are not sitting at 15.8 million jobs, so we are still about 600 000 jobs short to be where we were when we were hit by Covid.”
The expanded unemployment rate decreased by 0.5 of a percentage point to 42.6% in the fourth quarter of 2022 compared to the previous quarter.
But joblessness has become a permanent feature of the South African economy as the number of unemployed people increased from 4.7m to 7.8m in the decade between 2012 and 2022.
Investec economist Lara Hodes said that a significant pick up in confidence was imperative to drive sustainable growth and accordingly job creation.
“Although (unemployment) has declined notably from levels logged during the pandemic, it remains at a critically high level, with the labour participation rate at 58.5% evincing the fragility of the South African economy, which is plagued by ongoing rotational load shedding, significantly impeding activity and weighing heavily on confidence and investment,” Hodes said.
Energy security has been cited by many commentators as the single most important factor to getting the economy going and creating jobs.
According to the Council for Scientific and Industrial Research, 2022 overtook 2021 as the most intensive load shedding year yet, concentrated in the latter half of the year, with December 2022 experiencing the highest load shedding month ever.
Nedbank economist Johannes Khosa said business activities had been affected by the intense load shedding while at the same time higher interest rates and fragile consumer confidence would contain consumer spending.
Khosa said while the government was accelerating efforts to deal with issues at Eskom, it would take years to resolve this challenge completely and push the cost of doing business to remain high.
“Under these circumstances, business confidence will remain depressed, and the private sector will most likely limit investment spending and employment growth,” Khosa said.
“Employment by the government will be limited by the fiscal consolidation path, which, among other key objectives, prioritises the reduction of the wage bill.
“Added to this, the number of unemployed and discouraged work seekers who can enter the job market remains high, so even if employment were to increase, the unemployment rate is likely to remain structurally high over the medium term.”
Meanwhile, the youth unemployment rate measuring job-seekers between 15 and 24 years old rose to 61%, up from an over two-year low of 59.6% in the previous period.
FNB senior economist Thanda Sithole also noted that total employment was still below the pre-pandemic fourth quarter of 2019 level by 485 775 jobs.
Nevertheless, Sithole said it was encouraging that the labour market had gained momentum over the past five quarters.
“We expect the recovery in employment to continue, albeit protracted, especially given the prevailing domestic and global headwinds,” Sithole said.
“The domestic economy is expected to moderate to 0.4% this year, from 2.4% in 2022, before a gradual recovery to 1.6% by 2025. GDP growth of above 3.0% will need to be sustained to make a meaningful impact on employment creation.”
BUSINESS REPORT