S. Africa Unemployment at New High as Building, Trade Cut Jobs
South Africa’s official unemployment rate rose to a new high in the first quarter as the construction and trade industries shed jobs.
The jobless rate rose to 32.6% from 32.5% in the three months through December, Statistics South Africa said Tuesday in a report released in the capital, Pretoria. That’s the highest number on record.
Unemployment according to the expanded definition, which includes people who were available for work but not looking for a job, rose to 43.2% from 42.6% the previous quarter. That was as the number of discouraged work seekers surged by 201,000 people in the quarter.
Persistently high unemployment poses a threat to social stability in Africa’s most-industrialized economy. It could complicate efforts to reduce fiscal deficits and slow debt growth as it may force Finance Minister Tito Mboweni to re-introduce a special Covid-19 relief grant for unemployed people that ended in April. Mboweni in February announced plans to cut spending over the next three years as he targets a primary surplus in fiscal 2024-25.
Click here for a table that shows the breakdown of the unemployment data
South Africa’s official unemployment rate has been above 20% for at least two decades, even though the economy expanded by 5% or more a year in the early 2000s. Analysts cite an education system that doesn’t provide adequate skills, strict labor laws that make hiring and firing onerous and apartheid-era spatial planning that make it difficult for job seekers to enter and remain in the formal workforce as part of the problem.
Restrictions to curb the spread of Covid-19 caused gross domestic product to contract 7% in 2020 and worsened joblessness as it forced some businesses to cut wages, reduce staff or shut down permanently.
“Unemployment is unlikely to return to pre-crisis levels given we don’t see real per capita output returning to pre-crisis levels,” said Peter Attard Montalto, head of capital markets research at Intellidex. “The economy would need to see trend growth well above 2.5% rather than the 1.7% we see to absorb the lost jobs.”
While South Africa’s official unemployment rate is the third-highest of 82 countries tracked by Bloomberg, some data are for different periods.
- Construction lost 87,000 jobs.
- Trade industry lost 84,000 jobs.
- Transport lost 40,000 jobs.
- Finance industry added 215,000 jobs.
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