Unemployment rate highest since 2003
THE UNEMPLOYMENT rate, which increased from 26.5 percent in the last quarter of last year, is the highest since September 2003, despite a rise in employment in finance (152 000), manufacturing (145 000), and construction (143 000). Sectors that shed jobs were agriculture (44 000), trade (15 000) and government (2 000).
On the other hand, the expanded definition of unemployment, which includes people who have stopped looking for work, increased to 36.4 percent. In the first quarter of this year, the number of employed individuals increased by 0.9 percent on a quarter to quarter basis and 3.4 percent year-on-year.
The unemployment rate has raised fears of a recession.
Investec economist, Kamilla Kaplan said yesterday that economic growth had essentially stagnated in 2016 “and we forecast only a modest recovery in growth towards 2 percent by 2021. As such, unemployment rates are likely to remain stubbornly high.
“The recent political developments and the subsequent credit rating downgrades are perceived to have heightened policy uncertainty and further undermined business confidence. This suggest that the prospects for a meaningful recovery in private sector fixed investment and employment are poor,” said Kaplan.
Kaplan said the International Monetary Fund had recommended that “the priority to stimulate economic growth and job creation rests with structural reforms, notably in product and service markets and in the labour market”.
She said the recent cabinet reshuffle and prevailing political tensions had raised concerns that the government shift focus from implementing the required structural reforms. This, she said, was a contributing factor to the sovereign credit rating downgrades by ratings agencies, Fitch Ratings and S&P Global Ratings. – Siseko Njobeni