SA’s unemployment rate edges down to 32.7%

According to Stats SA’s latest Labour Force Survey (LFS), in Q4 2022 there were 40.462 million people aged between 15 and 64 years in SA (up 141 000 relative to Q3 2022, and up 574 000 over the past year). They comprise: 23.688 million economically active (up 197 000 in the quarter, and up 1.222 million over the past year); and 15.934 million employed (up 169 000 relative to Q3 2022, mostly in the formal sector, and up an incredible 1.390 million jobs over the past year). This equates to an official unemployment rate of 32.7%, down from 32.9% in Q3 2022, 33.9% in Q2 2022, 34.5% in Q1 2022 and 35.3% at the end of 2021. The number of discouraged workers fell by 443 000 over the year.This meant that the expanded definition of unemployed people was measured at 42.6% in Q4 2022, down from 43.1% in Q3 2022, 44.1% in Q2 2022, 45.5% in Q1 2022 and 46.2% in Q4 2021.

Interestingly, although SA has created more than a million jobs over the past year, which partly reflects the re-opening of businesses after the impact of the Covid-19 lockdown measures (as well as the improved measurement of household employment relative to the months during the worst of the Covid restrictions), employment is still not back at the level prior to the start of Covid-19. According to Stats SA data, SA has now added back a total of 1.78 million jobs since the aftermath of the initial Covid-19 restrictions introduced in early 2020. This means that, despite the recent job gains, the labour market is 594 000 jobs below the peak employment level achieved in Q4 2018 and 448 000 jobs below the level of employment that prevailed prior to the start of Covid.

More positively, there was some concern that the increase in electricity outages during Q4 2022 would result in further job losses. Instead, the economy added 169 000 jobs in the quarter, suggesting a high degree of resilience within the formal business sector. Many businesses are acutely aware of the difficulty of finding skilled individuals in SA and do not want to risk having to close key areas of their business. This does not suggest that the formal sector is likely to add substantially more jobs over the coming months (with the clear exception of the renewable energy sector), especially given SA’s numerous infrastructural challenges.

Overall, SA’s unemployment rate remains exceedingly high by historical as well as international standards, especially youth unemployment, which was measured at 61% in Q4 2022. In other words, despite the job gains over the past five quarters the economy has failed to keep pace with the growth in the population over an extended period. Covid-19 aggravated an already desperate situation. It is also clear that, within the labour market, youth unemployment remains SA’s most important economic challenge, highlighting the extreme difficulty young people experience in trying to obtain their first job opportunity – irrespective of qualifications. To address that issue, the government’s current emphasis on infrastructural development and policy reform needs to gain momentum.