Unemployment rate rises to 13-year high in the first quarter on impact of Covid-19
Joblessness rate is at a record-high 43.2%, according to the expanded definition of unemployment
THE COVID-19 pandemic continued to wreak havoc on the South African economy as the unemployment rate rose to a 13-year high in the first quarter, threatening the predicted economic recovery.
Data from Statistics South Africa (StatsSA) yesterday showed that 8 000 more people joined the ranks of the unemployed between January and March.
The official unemployment rate now stands at 32.6 percent, as 7.2 million people are without jobs, mainly the youth aged between 15 and 34.
StatsSA said the unemployment rate ticked up slightly by 0.1 of a percentage point in the first quarter of this year, from 32.5 percent in the fourth quarter of last year. This was the highest unemployment rate since 2008 during the global financial crisis.
The official unemployment rate among the youth was 46.3 percent in the first quarter, with the rate remaining at an elevated 9.3 percent among university graduates.
Investec economist Lara Hodes said the effect of the pandemic on employment had been immense, with many businesses forced to shut their doors permanently or decrease their workforce.
Hodes said the further restrictions implemented in response to the third wave of the pandemic had thus far been modest, to balance economic and health concerns.
“Accordingly, we are still anticipating growth of 3.9 percent this year,” Hodes said.
“Risks to this outlook, however, remain, and a timeous, efficient vaccine roll-out and the hastened implementation of key government reforms remain essential.”
StatsSA said that most jobs were lost in the informal sector, private households and agriculture, while formal sector employment increased by 79 000.
The Quarterly Labour Force Survey also showed that the working-age population grew by 144 000 in the first quarter.
However, those actively participating in the labour force declined by 20 000 to 22.2 million compared to the previous quarter.
Statistician-General Risenga Maluleke said a large number of people moved from the “employed” category to the “not economically active” and “unemployed” categories between the two quarters.
“The number of discouraged work seekers increased by about 201 000 people, taking us to about 3.1 million in the quarter,” Maluleke said.
“When you look at the not economically active, they decreased by 38 000, bringing us to about 14 million people.”
PwC chief economist Lullu Krugel said the 201 000 discouraged work seekers likely lost their jobs during the strictest levels of the lockdown last year.
Krugel said they expected the economy to create 384 000 jobs in the remainder of this year, and just more than 300 000 next year.
“However, at this rate, we estimate that the total number of employed will only return to 2019 levels by 2025,” she said.
According to the expanded definition of unemployment, the unemployment rate increased by 0.6 of a percentage point to 43.2 percent, the highest it has been.
Anchor Capital’s investment analyst Casey Delport said the underlying numbers were a cause of concern, particularly the continued rise in discouraged work seekers.
“This points to longer-term, structural issues within the South African economy as it is difficult to reincorporate/entice discouraged work seekers back into the labour force,” she said.
“All in all, these numbers are indicative of an economy still greatly impacted by the Covid-19 pandemic and resulting lockdowns of 2020, with many capable workers still inactive.”