Finance Sector Hemorrhage Spurs Record South Africa Unemployment

(Bloomberg) -- South Africa’s finance industry recorded the largest decrease in employment in the second quarter, pushing the nation’s jobless rate to the highest in the world. 

The number of people employed in the finance industry plunged by 278,000 to 2.25 million in the three months through June, Statistics South Africa said in a report released Tuesday in the capital, Pretoria. The official unemployment rate rose to 34.4%, the highest on a global list of 82 countries monitored by Bloomberg. 

The biggest decline in jobs in the finance sector was in the so-called other business activities sub-sector, which includes debt collectors, people who rate the credit of businesses and individuals, and those involved in brokerage activities, Chief Director for Labour Statistics Malerato Mosiane said in an interview. There were marginal job losses in financial intermediation, excluding insurance and pension funds, and at businesses that deal with renting of machinery and equipment, she said. 

The reintroduction of strict lockdown measures in June to curb a third wave of coronavirus infections weighed on activity in the second quarter. Virus restrictions caused Africa’s most industrialized economy to suffer its biggest contraction in a century last year and forced some businesses to cut wages, reduce staff or shut down permanently. 

Uncertain economic conditions mean the outlook for the job market remains poor, Nedbank economists Johannes Khosa and Nicky Weimar said in a note.

“Although the economy is slowly moving toward higher ground, private firms were hard-hit by last year’s strict lockdown,” they said. “The repeated return to tighter restrictions and the destruction caused by the riots in July continues to undermine confidence and disrupt production, robbing firms of the space to recover and the ability to form a clear image of future demand conditions.”

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