Unemployment rate retreats to 34.5%

South Africa’s official unemployment rate retreated in the first quarter of 2022, marking the first easing since the third quarter of 2020.

According to data from Statistics South Africa, the official jobless rate was 34.5% of the labour force after the first three months of the year. This is an improvement from 35.3% at the end of 2021. Until now, the country’s deepening jobs crisis had seen the unemployment rate hit record highs for six consecutive quarters. 

The official rate only tells a part of the story in a country with one of the highest levels of unemployment in the world. The expanded unemployment rate — which also counts job seekers who have given up on the search — was 45.5% in the first quarter of 2022, down from 46.2% in the previous quarter.

South Africa, which recorded an annual GDP growth rate of 4.9% in 2021, has struggled to claw back jobs after Covid-19’s economic onslaught caused the country’s employed labour force to shrink by 2.2 million in the second quarter of 2020. The economy had only recovered a net 396 000 jobs by the fourth quarter of 2021.

Tuesday’s unemployment statistics indicate that 370 000 jobs were gained between the fourth quarter of 2021 and the first quarter of 2022.

The biggest job gains were recorded in community and social services, manufacturing and trade. There were job losses in private households, finance, construction and agriculture. In all, there were 14.9 million people with jobs in the first quarter of 2022.

Despite the first quarter data signalling that South Africa may have turned the corner on the jobs front, forecasters seem convinced that the unemployment rate will ultimately continue to climb. Prior to Tuesday’s release, analysts were expecting a more conservative retreat in the unemployment rate.

On Monday, PwC noted in the May edition of its economic outlook for the country that it expects the unemployment rate to reach 35.6% in 2022 and 36% in 2023. In its World Economic Outlook, released in April, the International Monetary Fund forecast that South Africa’s unemployment rate would hit 37% in 2023.

Persistent load-shedding, elevated inflation, as well as higher interest rates are set to dampen economic growth this year, exerting a negative effect on employment. 

The effect of April’s devastating floods in KwaZulu-Natal, which has historically generated about 16% of the money in South Africa’s economy, is not reflected in the first quarter unemployment statistics. 
In his maiden budget tabled in February, Finance Minister Enoch Godongwana warned that there was a real risk that many of the jobs eliminated as a result of the pandemic would not be recovered. This warning was delivered in the early days of Russia’s war on Ukraine, long before its full effect on inflation had been realised, and a couple of months before the KwaZulu-Natal floods.

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