Cherish your job, work hard
UNEMPLOYMENT: SET TO INCREASE TO 31%
The unemployment rate is actually higher than the 29.1% reported by the media after the release of the latest figures by Statistics SA, and forecasts indicate that it will continue to climb in 2020.
Stats SA seems to have downplayed the much higher “expanded” unemployment rate of 36.9% in its report, following its Quarterly Labour Force Survey conducted in the last quarter of 2019. The so-called expanded definition of unemployment includes unemployed people who have given up hope and stopped searching.
Including these discouraged work seekers increases the number of unemployed to nearly 9.6 million, compared with the 6.7 million recognised as unemployed by the strict definition of unemployment used by Stats SA to calculate the 29.1%.
Unfortunately, unemployment is expected to increase even further in 2020.
The recent quarterly bulletin from the SA Reserve Bank (Sarb) states prospects for meaningful employment creation and wage growth are weighed down by sustained weak domestic economic activity and low business confidence.
Moneyweb asked economists for their views with regards to the outlook for employment.
We received only bad news.
Izak Odendaal, investment strategist at Old Mutual Wealth, says he prefers Stats SA’s quarterly employment survey above the labour force survey that looks at households. “The labour force survey shows that employment has been growing. The formal sector has added around one million jobs over the last year, with employment increasing from nine million to ten million people.
“However, unemployment continues to increase as the labour force is increasing faster [than the rate at which] we can create jobs. The economy is struggling, and businesses are forced to cut costs when business activity decreases and they see their income fall. This leads to reducing employee [numbers].”
Dr Chris Harmse, economist and chief investment officer at Rebalance Fund Managers, says exactly the same situation persists now, as at the end of 2019 when the Sarb was writing its quarterly report.
He highlights the Sarb’s estimate that 200 000 jobs were lost in 2019.
“The reintroduction of load shedding by Eskom has already started to have a negative effect. Manufacturing production during December was already down by more than 5% year on year and retail sales turned negative.
“The World Bank, the Reserve Bank and rating agency Moody’s all downgraded their growth forecasts.
“One can therefore expect that another 200 000 jobs in the formal sector will likely be lost in 2020 and we can expect the unemployment rate to increase by almost 2% by the end of 2020 to an overall unemployment rate of nearly 31%,” predicts Harmse.
Does SA have any chance of winning the battle against unemployment?
Looking a bit wider than only the labour force, unemployment figures suggest a war, rather than a battle.
Estimates from Stats SA put the population aged between 15 and 24 years that could eventually enter the labour force at 38.7 million, compared to the active labour force of 23.2 million economically active people either employed or unemployed.
A large proportion of the other 12 million is at school or attending other educational facilities and will be entering the labour market en masse very soon.
In short, work hard and be very nice to your boss and co-workers. There are few opportunities out there.