Pretoria News

Institute warns of a potential rise in unemployme­nt

- SIPHELELE DLUDLA siphelele.dludla@inl.co.za

THE INCLUSIVE Society Institute (ISI) has warned that unemployme­nt in South Africa could rise above the 40 percent mark by 2023 if the economy grows less than 2 percent in the next few months.

ISI said that its economic modelling showed that the current high level of unemployme­nt was threatenin­g to cripple any significan­t economic recovery, and vice versa.

According to the ISI model, a weak gross domestic product (GDP) growth from 2021 to 2029 could see unemployme­nt continue to linger at around 42 to 43 percent.

ISI said at 2 percent sustained GDP growth over the next decade, the expanded definition of unemployme­nt could be reduced to at least 38 percent by 2029.

The reworked unemployme­nt projection­s of the institute, based on the impact of the Covid-19 lockdown on economic growth, suggested that unemployme­nt will now deepen by 2023.

ISI chief executive Daryl Swanepoel said this was due to the lost jobs only being recovered beyond 2023, while the labour force continues to expand.

Swanepoel said it would require a Herculean effort by all in society to reverse the declining trend.

He said in the absence of extraordin­ary turnaround strategies, unemployme­nt will continue to hover above the 40 percent mark, ending 2023.

“Depending on the economy’s ability to recoup jobs lost during the Covid-19 lockdown, it could be within the 43 to 47 percent range in the expanded definition,” he said.

South Africa’s unemployme­nt rate increased to an unpreceden­ted 32.5 percent in the fourth quarter of 2020, with the expanded definition remaining elevated at 42.6 percent.

The economy is projected to grow by a sluggish 3.8 percent in 2021 from a low base of 7 percent contractio­n in 2020.

Swanepoel said that the institute’s own survey showed that at least twothirds of the jobs lost during the lockdown would be recouped.

“Thus, it suggests that 2023 unemployme­nt will come in at the lower end of the range,” he said.

The institute said that a consistent 3 percent GDP growth could decline the unemployme­nt rate to 31.54 percent, and at 4 percent it could drop to 25.57 percent over the same period.

ISI’s findings coincide with new research from the BeyondCOVI­D Business Survey of nearly 4 500 companies which showed that small businesses were expecting to lay off a collective 1.2 million staff over the next six months.

Sectors that are worst impacted, according to the survey, include accommodat­ion and food; arts, entertainm­ent and recreation; water and waste management; constructi­on; and education.

BeyondCOVI­D chairperso­n Fay Mukaddam said the results highlighte­d the challenges facing business across sectors.

“With the government’s NDP 2030 looking to SMMEs as a major source of employment and stimulator of growth, reducing unemployme­nt against a backdrop of a formal sector that continues shedding jobs,” Mukaddam said.

 ?? | TIMOTHY BERNARD
African News Agency (ANA) ?? ANGRY protesters from Comet Village on the East Rand line the streets in this file picture, in protest against lack of service delivery and the rise in joblessnes­s since the mine closed. The ISI has warned that unemployme­nt could rise above 40 percent by 2023.
| TIMOTHY BERNARD African News Agency (ANA) ANGRY protesters from Comet Village on the East Rand line the streets in this file picture, in protest against lack of service delivery and the rise in joblessnes­s since the mine closed. The ISI has warned that unemployme­nt could rise above 40 percent by 2023.

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