High youth unemployment highlights gravity of SA unemployment

The high youth unemployment figures for January clearly show how bad unemployment in South Africa is, with 61% of young people between the ages of 15 and 24 and 39.9% of people between the ages of 25 and 34 years unemployed.

Economic research group, Oxford Economics Africa, says South Africa’s unemployment rate is decreasing at a sluggish pace, while the weakened economic growth outlook bodes ill for future employment growth and the high youth unemployment rate highlights the unemployment crisis.

“The latest jobs report offers some good news but does not detract from South Africa’s sky-high unemployment rate, which has consistently remained above 20% for more than two decades now. What’s more, concerns about weak economic growth over the medium-term risk the unemployment rate becoming entrenched at current lofty levels.”

According to Statistics SA’s Q4 2022 Quarterly Labour Force Survey (QLFS), the number of unemployed people stood at roughly 7.8 million in the fourth quarter of 2022, a slight increase from the third quarter. The number of employed individuals increased by 1.1% compared to the third quarter, thanks to an uptick in formal sector employment.

Meanwhile, the labour force participation and absorption rates increased marginally in the fourth quarter and although South Africa’s unemployment rate dipped by 0.2 percentage points most recently, it remains concerningly high at 32.7%.

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Decrease in unemployment cancelled by increase in working-age population

The number of unemployed people increased by 28 000 compared to the previous quarter to roughly 7.8 million and the working-age population increased by 141 000 (+0.3% compared to the previous quarter), while the total number employed people increased by 169 000 (+1.1% compared to the previous quarter) to reach 15.9 million.

The formal sector added 143 000 jobs, while the informal sector recorded a 15 000 loss in employment. Discouraged work-seekers (-151,000 q/q) decreased by 151 000 to 3.4 million, while the number of people who were not economically active for reasons other than discouragement increased by 95 000, which resulted in a net decrease of about 57 000 in the not economically active population to 16.8 million.

The labour force participation rate was 0.2 percentage points higher compared to the previous quarter at 58.5%, compared to pre-pandemic levels of about 60%. The growth in employment in the fourth quarter contributed to a slight improvement in South Africa’s labour absorption rate to 39.4%.

The unemployment rate according to the expanded definition of unemployment (the ‘broad’ unemployment rate) decreased by 0.5 percentage points to 42.6%. The most job gains were in the finance (+103,000), private households (+54,000), trade (+52,000) and transport (+43,000) industries, while job losses were recorded in community and social services (-122,000), agriculture (-12,000) and construction (-12,000).