Covid slashes more than 2-million jobs

• Stats SA says expanded unemployment rate is 42% • .Quirk puts official rate at 23.3%

economy late in March. To be defined as unemployed a “” person must be able to look for and be available for work.

Instead, with many people confined to their homes, an additional 5.2-million people were classified as not econom

“ically active ”, a 33.4% increase. The huge jump in the NEA category shrank the labour force and made the ratio of unemployed people relative to the labour force drop, said Peter Little, fund manager at Anchor Capital.

This is kind of a statistical “quirk and obviously the headline number is misleading,” Little told Business Day. If the figures were normalised by adding the “” more than 5-million people classified as economically inactive back to the labour force, this implied an unemployment rate of 39.7%, he said.

Though some of the jobs lost might be recovered in the second half, PwC still expected about 1.5-million jobs to be shed

in 2020, said economists Lullu Krugel and Christie Viljoen. The data fluke notwithstanding, the Covid-19 crisis has upped the ante for president Cyril Ramaphosa s administration which has made little headway in altering SA s economic growth trajectory or creating jobs. In a statement on Tuesday, Ramaphosa said that the cabinet was in the process of finalising a programme for a return to growth. Structural reforms and investment in infrastructure would play a key role. We must ensure that every job lost during the crisis is replaced and that more jobs are created so that we can meaningfully reduce unemployment,” said Ramaphosa.

Already in recession before the pandemic struck, SA recorded a seasonally adjusted and annualised 51% GDP contraction, the worst reduction since quarterly records began in 1960. The country is awaiting a comprehensive economic recovery plan drafted under

– the auspices of Nedlac to be – ratified and announced by the cabinet. If unemployment issues are not addressed, countries such as SA faced rising social unrest, which was already beginning to manifest, the PwC economists said. In September, SA had the most protests in a calendar month since the election of Ramaphosa early in 2018, based on figures from the Armed Conflict Location & Event Data Project (ACLED).

The QLFS also highlighted the difficulties households are facing as incomes were slashed. Of the 14.2-million people who managed to stay employed during the lockdown only 81.3% received salaries. Of those who were paid, about a 21.1% had their salaries cut.

The strain on household incomes was also reflected in data from the Reserve Bank, which released its quarterly bulletin on Tuesday, showing a 49.7% fall in households real

’ disposable income in the second quarter, on a seasonally adjusted and annualised basis.

The full unemployment picture is however yet to emerge as the economy reopens and businesses gauge the level of recovery, and more people have been able to actively seek work.

Its tough to try and extrapolate general trends from this data,” said Little. Third-quarter data would probably provide a better sense of the longer-term impact on unemployment once industries opened up again and some of those people were absorbed back in to the workforce, he said.

Statistician-general Risenga Maluleke would however not be drawn on whether the opening up of the economy, enabling more people to seek work, would result in the official unemployment rate rising again. The job of a statistician in “official practice is not to speculate [on] what would happen, it is to go and measure and see what happens,” he said.

THIS IS KIND OF A STATISTICAL QUIRK AND OBVIOUSLY THE HEADLINE NUMBER IS MISLEADING

THIRD-QUARTER DATA WOULD PROBABLY PROVIDE A BETTER SENSE OF THE LONGER-TERM IMPACT ON UNEMPLOYMENT