Unemployment grim, moving in wrong direction ahead of election

The unemployment numbers for the first quarter of 2024 are grim and moving in the wrong direction ahead of the election. The official unemployment rate increased to 32.9% in the first quarter, while the ‘broad’ unemployment rate increased to 41.9%.

Statistics SA released the Labour Force Survey for the first quarter of the year on Tuesday, with the latest figure on par with that recorded in the first quarter of 2023. Meanwhile, the expanded unemployment rate came in at 41.9%, up from 41.1% in the fourth quarter of 2023 and down from the 42.4% recorded in the first quarter of 2023.

Jee-A van der Linde, senior economist at Oxford Economics Africa, says South Africans have grown accustomed to remarkably high unemployment and the ANC government has no substantive trend suggesting improvement is on the way.

He warns a lacklustre growth outlook means we can expect little favourable movement regarding employment going forward.

The number of employed people increased by 22 000 to 16.7 million in the first quarter compared to the fourth quarter of 2023, while the number of unemployed people increased by a more concerning 330 000 to 8.2 million compared to the previous quarter.

South Africa’s official unemployment rate moved higher to 32.9% in Q1 2024, while the ‘broad’ unemployment rate increased to 41.9%

ALSO READ: This is what the unemployment rate tells us about SA’s economy

Jobs day rarely positive with grim unemployment numbers

Van der Linde says jobs day is rarely a positive one in South Africa and the latest numbers are particularly grim. “The unemployment rate continues to move in the wrong direction ahead of the upcoming elections. Although these numbers will probably have little impact on the actual outcome, it will nonetheless annoy the ruling ANC on the campaign trail trying to appease voters with its efforts to boost job growth and provide a better life for the people.”

In general, South Africa’s economic growth outlook will remain dismal after the elections, he says. “A lack of infrastructure investment over the years has limited economic growth potential, which means the economy is unable to produce enough jobs to satisfy demand.”

He warns that low levels of private sector confidence, the repercussions of state capture and counterproductive policies are among the key reasons for the decline in fixed investment.

“With the state incapable of going it alone, more private-public partnerships are touted, but swifter action is required. Consequently, we forecast that South Africa’s unemployment rate will hover at current high levels over the medium term.”

ALSO READ: Unemployment increased again in first quarter

Less load shedding and better logistics helped to create some jobs

Johannes Matimba Khosa and Nicky Weimar, economists at the Nedbank Group Economic Unit, say the total of 552 000 jobs created compared to a year ago was probably boosted by less disruptive power cuts and modest improvements in rail and port services.

However, they say, the outlook for the job market remains poor. “Employment in the services industries will likely stagnate as restrictive monetary policy continues to weigh on domestic demand, hurting confidence, making consumers wary of spending and companies’ unwillingness to undertake fixed investment.”

At the same time, public sector employment will continue to be restricted by government caps on staff numbers to support necessary fiscal consolidation, they say.

“While structural constraints have eased since the start of the year, with reduced load-shedding and improved transport services, most producers and exporters will probably focus on restoring their profit margins badly depleted by the severe disruptions and surge in operating costs last year.”

Consequently, they expect job creation to remain weak in 2024, with employment drifting sideways. However, they believe a more meaningful recovery is likely next year as inflation dips towards 4.5% and the South African Reserve Bank reduces interest rates more significantly, creating space for faster growth in domestic demand and job creation.

“Moreover, agriculture, mining and manufacturing could also increase employment in 2025 as global demand picks up and commodity prices strengthen, but only if the country manages to sustain the improvements in power supply and transport services.”

ALSO READ: Unemployment rate decreases slightly to 31.9%

Cannot get a job? Consider becoming an entrepreneur

By Allon Raiz, Raizcorp CEO, says entrepreneurship is needed in South Africa to deal with unemployment. “The road to becoming an entrepreneur is not all rosy – it may take months, even years to set up a dream project. To ensure more job opportunities and South Africa needs to have more entrepreneurs to have a sharp increase in employment rate.”

He points out that entrepreneurs must have grit, vision, the ability to embrace failure and believe in your why.

“Grit is one of the characteristics entrepreneurs must possess to have a chance at success. You need the ability to stand up again and again and again, no matter how hard you are knocked down. You must also be resilient, trustworthy, resourceful and flexible.”

Raiz says without a crystal-clear vision, your business is like a rudderless ship that cannot avoid treacherous rocks.

“As the captain, it is your job to map out the vision – the destination – of your ship. You must turn your vision into a practical strategy and filter it down to your entire organisation. If everyone knows what they have to do to reach the destination, they are less likely to stray off course.”

No one likes to fail but if you are failing, you are learning, he says, even if all you learn is how not to do something.

“When you fail (and you will), give yourself time to lick your wounds, nut not too much time; do not wallow. Feel the pain, embrace the failure and move on stronger than ever.”

About believing in your why, Raiz says you must know why you are in business.

“What is the “big picture reason” that makes you slog away, day in and day out? If you do not believe in what you are trying to achieve, it is guaranteed that no one else will care. Your why is what will keep you going when times get tough.”