SOUTH AFRICA: UNEMPLOYMENT STILL IN A SLUMP DESPITE IMPROVED GDP

Fri 11 December 2020:

While the better-than-expected latest gross domestic product (GDP) figures indicate that more people became employed in the third quarter of 2020, this does not mean that South Africa is out of the woods, says the Department of Employment and Labour.

In a statement on the latest figures, department Director-General, Thobile Lamati, said the rate of absorption of new entrants was still low.

“The results in the third quarter of 2020 appear to suggest that the increase in the GDP translates into increased employment but it does not indicate that South Africa is out of trouble with the persistently high number of unemployed people in the country.

“The labour absorption rate increased only by 1.2 percentage points from the second (36.6%) to the third (37.5%) quarters of 2020.”

Lamati said while the results seem to confirm that the relaxation of the lockdown restrictions might be a good strategic policy choice, people must, however, still adhere to COVID-19 health safety guidelines in order to sustain the current positive economic trends.

Government departments, the DG said, must strengthen mechanisms to monitor and implement the new economic recovery plan in order to combat the high level of inequality and poverty in the country.

“All this, of course, should be done within the policy imperatives of health and safety in the workplace to ensure that workers are protected from the pandemic and other dangers, as outlined in the various pieces of legislation to ensure a healthy and safe workplace,” Lamati said.

Unemployment levels increased substantially by 2.2 million to 6.5 million in quarter three of 2020, compared to quarter 2 of 2020, resulting in an increase of 2.8 million more people in the labour force (employed and unemployed) in September 2020. This means that more of those, who were reported to be Not Economically Active (NEA) in quarter two of 2020, have now been reported to be unemployed, which led to an increase in unemployment levels in the third quarter of 2020.

“The number of employed persons increased by 543 000 to 14.7 million in the third quarter of 2020, compared to 14.1 million in the second quarter of 2020.

“The data have shown that all sectors reported employment gains, with the largest in the formal sector (non-agricultural), with 44% and the least being in the agriculture sector, with 1.6% in the third quarter of 2020.

“However, this comes with the caution that employment is still well below employment loses reflected during quarter two [under] lockdown restrictions,” Lamati said.

Similar employment gains were recorded in all nine provinces, with the largest increase of 116 000 recorded in Limpopo. The least employment increase was recorded in the Northern Cape, with only 31 000 over the same period.

Eight out of 10 industries (using the Standard International Classification codes) reported employment net gains, except for the utilities and transport industries, with 23 000 and 7 000 job losses respectively.

The industries that gained the most jobs are finance (200 000), community and social services (137 000) and private households (116 000) between quarters two and three of 2020.