South Africa's Jobless Rate Persists Near a 15-Year High
(Bloomberg) -- South Africa’s jobless rate stayed near a 15-year high in the first quarter as optimism following the ascent to power of President Cyril Ramaphosa failed to translate into increased employment opportunities.
The unemployment rate was 26.7 percent, unchanged from the previous three months, Statistics South Africa said in a report released on Tuesday in the capital, Pretoria. The median estimate was for 26.9 percent.
Africa’s most-industrialized economy hasn’t expanded at more than 2 percent since 2013 and has struggled to grow jobs. For the past two years more than one in four people in the workforce have been unemployed in South Africa. While Ramaphosa’s rise to power since December initially boosted sentiment and the rand following former President Jacob Zuma’s scandal-ridden tenure of almost nine years, confidence indexes have now returned to levels they were at late last year as businesses seek real reforms in the economy.
“The structural challenges in the economy are still holding back the creation of jobs,” Abri du Plessis, an economist and portfolio manager at Gryphon Asset Management Ltd., said by phone. Companies need to invest in capital expenditure, and “the Ramaphosa euphoria will probably help going forward just in putting their minds at ease to start spending in the economy again.”
In his previous role as deputy president, Ramaphosa helped lead talks with the private sector on a jobs program and in March the country announced a Youth Employment Services pact that will offer 1 million young people paid internships over the next three years. Almost 40 percent of people between 15 and 34 are unemployed, the statistics agency said.
The number of people employed advanced by 206,000 to 16.4 million, while those without jobs rose 100,000 to 5.98 million.
“While the economic outlook has improved in South Africa, we need to bear in mind that it’s early days and this economy is going to take a while before it becomes labor-absorbing again,” Jeffrey Schultz, an economist at BNP Paribas in Johannesburg, said by phone. “We still have many industries, particularly the mining industry where a lot of mines are still operating at losses given the commodity-price environment.”
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