Brace for job loss unrest

A closer look at yesterday’s labour force survey betrays the deceptively positive spectre of a sharp drop in unemployment in the second quarter of 2020, experts say.

The Statistics SA report shows that unemployment slowed 23.3% in the second quarter, a period characterised by devastating restrictions to economic activity because of the Covid-19 pandemic.

At the same time, the economy was said to have lost 2.2 million jobs during this period, a figure which could make another dramatic change for the worse, come the end of the year, said economist Dr Philippe Burger.

The survey’s results indicated the largest quarter-to-quarter decline in jobs since 2008, showing the number of employed persons decreased by 2.2 million to 14.1 million in the second quarter of 2020 compared to the first quarter.

But, at the same time, the number of unemployed persons dropped by a massive 2.8 million to 4.3 million compared to the first quarter.

According to Burger, this anomaly was largely due to the conditions of the lockdown, which prevented millions of unemployed people from actively finding work.

Because unemployment is also defined by whether one is actively seeking work, Burger explained, many people who were in the job-seeking category of unemployment before the lockdown began, moved into the category of the economically inactive.

According to the survey, the number of discouraged job-seekers also decreased 447,000.

The majority of those who moved out of these three categories moved into the category of not economically active for reasons other than discouragement.

The number of people in this category increased by 5.6 million between the two quarters.

This meant, should the economy continue a steady recovery, more people would begin looking for work, increasing the chances of unemployment going up substantially.

But this did not mean there would not be some real recovery of actual jobs lost.

“The number of unemployed people fell from seven million to 4.3 million and when it goes up go up, we will add five million people
there. Then it will go to nine million in the third and the fourth quarter, if those who lost their jobs in the first and second quarter don’t get employed in the last two quarters,” said Burger.

“Because the economy is bouncing back to some extent, of the 2.2 million people who lost their jobs, there might be a number who will get their jobs back. But there will still be a large number of people who no longer have jobs.”

The informal sector was the hardest-hit by the pandemic. While South Africa has some 2.7 million workers in the informal sector, accounting
for 22.5% of total employment, it lost over a quarter of those jobs during the second quarter of this year.

Of the 2.2 million jobs lost, 640,000 were in the informal sector, largely in construction.

The percentage of those who lost their jobs in the formal sector was 10.8%, while in the informal sector that figure was 22%. In private households, which include domestic and gardening work, it was 24%.

Noting the anomalies created by the lockdown period, accounting firm PriceWaterhouseCoopers (PwC) predicted South Africa’s net employment carnage for this year would be 1.5 million jobs.

“If unsuccessful in addressing unemployment issues, PwC’s ADAPT framework warns that economies like South Africa may face increasing social unrest,” the firm said in a statement.

“Rising social and political unrest is already manifesting in the country. Data from the Armed Conflict Location & Event Data Project shows that SA experienced the most protests in September since the appointment of President Cyril Ramaphosa early in 2018.”

– simnikiweh@citizen.co.za

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