We’re 4% poorer than in 2014
SLIDE: ONE JOB FOR EVERY 24 ENTERING THE MARKET
Everybody in SA will keep getting poorer and unemployment will continue to increase as long as population growth exceeds economic growth.
Statistics South Africa’s (StatsSA) Quarterly Labour Force Survey for the second quarter of this year showing the rise in the number of unemployed, its report on population growth and the Reserve Bank’s (Sarb’s) statement on interest rates creates a gloomy picture.
The labour force survey shows the economy added a paltry 25 000 jobs year-on-year (y/y), while the labour force increased by 598 000 workseekers.
Formal, non-agricultural employment continued to decrease rapidly, losing 148 000 jobs y/y. The only category to show an employment increase was the informal sector, adding 219 000 jobs.
Looking at StatsSA’s 2014 labour force survey, the battle against unemployment and, by indication, the war against poverty and inequality are being lost.
The number of unemployed
people increased by 1.6 million. The economy could only absorb 1.3 million of these new work-seekers (see table).
In just the past year, the number of unemployed increased by 573 000 to nearly 6.7 million. The total rises to 9.4 million when adding discouraged work-seekers.
The biggest driver behind the unemployment rate rising to 29% (or 38.5% including discouraged work-seekers) is the continued population rise.
While the number of employed persons increased 0.2% y/y, the labour force increased 2.7%.
The low growth in new employment opportunities is due to low economic growth and little indication of better prospects over the short- to medium term.
Sarb governor Lesetja Kganyago said after July’s Monetary Policy Committee meeting that GDP contracted 3.2% in the first quarter, reflecting weakness in most sectors of the economy.
“The sharp quarterly decline was primarily caused by electricity shortages and strikes that fed into broader weakness in investment, household consumption and employment growth.
“Continued low business confidence remains a concern for the Monetary Policy Committee ... [Sarb’s] composite leading business cycle indicator continues to trend lower.”
Sarb now expects only 0.6% GDP growth this year versus its 1% forecast a few months earlier.
StatsSA’s latest research estimates SA’s total population increased 1.4% during the last year to nearly 58.8 million at end June this year.
Given the 0.6% growth in GDP, the result is that, on average, every person in SA has less goods and services than a year ago.
The population increase is due to reduced infant mortality and an overall increase in life expectancy to nearly 73 for babies born in 2019.
Immigration from the rest of Africa also contributed.
Unfortunately, since the economy has grown much slower, every person in SA is on average 4.1% poorer than five years ago.