Unemployment forecast to slightly increase in second quarter as Covid lockdown bites economy
UNEMPLOYMENT is forecast to have slightly increased for a second consecutive quarter this year as the Covid-19 extended lockdown restrictions continued to bite on economic activity.
In the three months to June, the country was adjusted from alert level 1 lockdown to alert level 4 by the end of the quarter, leaving more sectors to trade under stringent conditions.
Statistics SA (StatsSA) will tomorrow release the results of the Quarterly Labour Force Survey for the second quarter of 2021.
The official unemployment rate in South Africa now stands at 32.6 percent as more than 7.2 million people are without jobs, mainly the youth aged between 15-34.
The economy lost 28 000 jobs in the first quarter of 2021 relative to the fourth quarter of 2020, while unemployment rose by 8 000 over the same period.
Subsequently, the labour force fell by 20 000, resulting in the official unemployment rate of 32.6 percent compared with 32.5 percent previously, the highest level since 1994.
The onset of the third wave of Covid-19 driven by the Delta variant during the quarter left economists on Friday forecasting rising joblessness due to slower business activity as new infections rose significantly.
FNB chief economist Mamello Matikinca-Ngwenya said the momentum in the quarterly job gains seen in the last two quarters of 2020 had reversed slightly in the first quarter of 2021.
“Worryingly, the level of employment was still 8.5 percent, or about 1.4 million jobs, lower in the first quarter of 2021 relative to the same period in 2020,” she said.
“(This was) while unemployment was 2.5 percent, or about 172 000 higher over the corresponding period.”
The continued disruption of alcohol sales and trade within the hospitality sector is also expected to have hit employment at a time when the economy needed more jobs.
Investec economist Kamilla Kaplan said the rate of unemployment could have risen by at least 0.5 percentage points during the second quarter. “The second quarter is expected to show an increase in the unemployment rate to 33.1 percent from 32.6 percent in the first quarter,” she said.
Global Covid-19 cases continue to increase at a faster rate in spite of ramped up vaccination roll-outs, resulting in the slowdown.
However, Optimum Financial Services Group economic adviser Dr Roelof Botha said South Africa’s post-pandemic recovery was on track.
Botha said the recent civil unrest and supply-chain disruption was merely a blimp on an otherwise positive growth trajectory.
“The point is that we will have growth and the existence of an impressive number of growth drivers suggests that the economic recovery will gain momentum into 2022 and possibly beyond,” Botha said.
“As necessary as economic transformation is, it should be an evolutionary process, otherwise business confidence will lag behind the dire need for substantial new investment in productive capacity and employment creation.”