At 34.4%, SA officially has the highest unemployment rate in the world
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The rate of unemployment in South Africa could threaten the expected economic rebound this year after it worsened to a new record high in the second quarter of 2021 due to more than 500 days of the national lockdown.
Data from Statistics South Africa (Stats SA) yesterday, showed that the jobless rate increased by 1.8 percentage points to 34.4 percent in the second quarter, from to 32.6 percent in the first quarter.
This is the highest unemployment rate recorded since the start of the Quarterly Labour Force Survey (QLFS) in 2008.
Economist Mike Schüssler said he did not expect the jobless rate to be this high because economic recovery had started showing signs of improvement.
Schüssler said the fiscus would struggle to collect personal income tax as more people were pushed into unemployment, leaving the government to run bigger budget deficits to finance social security.
“We now officially have the highest unemployment rate in the world. We are looking at a very dire situation,” Schüssler said.
“We have not seen jobs coming back after Covid-19 and we don’t have an indication of the job situation yet on the riots and the looting that we had in July.”
The results of the QLFS for the second quarter showed that a total of 54 000 jobs were lost between April and June, with 375 000 jobs shed in the formal sector of the economy.
The jobs print also further confirmed that this was the third fall in employment since the national lockdown in March 2020.
Statistician-General Risenga Maluleke said the number of unemployed persons rose by 584 000 in the second quarter compared to the first quarter.
“And this 584 000 people pushed our number of unemployed from the second quarter which was 7.2 million people to 7.8 million,” Maluleke said.
As a result of more people entering the jobs market, the labour force went up by 530 000 to 22.8 million.
FNB economist Thando Sithole said growth-enhancing economic reforms would need to be implemented to create conditions for a sustainable and higher growth path.
“This, along with other policy interventions related to reskilling, quality education and improved educational outcomes, should ultimately address the elevated unemployment rate,” she said.
The number of discouraged work-seekers increased by 186 000.
Investec economist Lara Hodes said the effects of the looting and unrest in parts of the country during July would further exacerbate the domestic unemployment crisis.
“Growth for the year has been revised downward owing to the economic effects of the looting, while confidence levels are likely to haven’t fallen notably weighing on future investment,” Hodes said.
The expanded definition of unemployment, including people who have stopped looking for work, increased by 1.2 percentage points to 44.4 percent in the second quarter.
Nedbank economist Johannes Khosa said the outlook for the job market remained poor on the back of subdued and uncertain economic conditions.
“The economy is recovering gradually but the damage caused by the 2020 lockdown shocks will take time to repair, and as a result, an increase in job creation is not likely to be meaningful in the short term,” Khosa said.