Young people in South Africa continue to be sidelined by tough economic conditions as more than three million youth have remained in the ranks of non-economically active people, in spite of the rate of unemployment falling to its lowest level in one-and-a-half years in the three months to September.
Statistics SA (Stats SA) said yesterday that youth aged 15-24 and 25-34 recorded the highest unemployment rates of 59.6% and 40.5% respectively in the three months between July and September.
Moreover, Stats SA’s Quarterly Labour Force Survey (QLFS) showed that about 3.5 million, or 34.5% of the 10.2 million young people aged 15-24 were not in employment, education or training (NEET), meaning a 1 percentage point increase in NEET in the third quarter.
Investec economist Lara Hodes said the youth category has been particularly afflicted by the country’s critical unemployment problem, though it slowed to 59.6% from 61.4% previously. “However, despite this modest improvement, unemployment in this segment of the economy remains unacceptably high,” Hodes said.
“Improving the quality of and access to education remains a key priority. According to Stats SA, of the 7.7 million unemployed persons in the third quarter, as many as 51.5% had education levels below matric, followed by those with matric at 38.2%.”
Stats SA said yesterday that the official unemployment rate in South Africa fell by 1 percentage point to 32.9% in the third quarter, down from 33.9% in the second quarter.
This was the lowest jobless rate since the first quarter of 2021 as the number of unemployed people declined by 269 000 to 7.7 million, while employment rose by 204 000 to 15.8 million.
However, general employment conditions remained subdued, with job creation still falling short of pre-Covid-19 levels.
The unemployment rate according to the expanded definition of unemployment also decreased by 1 percentage point to 43.1% in the third quarter, down from 44.1% in the second quarter.
“Unemployment has been going down from the first quarter, that is why in the second quarter we had 8 million people unemployed but now we are sitting at 7.7 million, so we have seen a decrease of about 269 000 of those that are unemployed,” said Statistician-General Risenga Maluleke.
According to data, at least 204 000 jobs were gained between the second quarter and the third quarter in spite of economic headwinds and crippling power cuts.
Manufacturing, trade, construction and transport recorded the largest job gains, while job losses were recorded in finance, private households and mining and agriculture.
PSG Wealth chief investment officer Adriaan Pask said the decrease in unemployment was a positive development, given the current tough economic backdrop.
“However, to ensure an upward trend in employment, both the private and public sectors must accelerate the implementation of structural and pro-business reforms to unlock investment, reduce costs and increase competitiveness and growth, all of which will go a long way in creating sustainable employment,” Pask said.
“The decrease is also in line with our previous comment that although the pandemic has lasted far longer than anticipated, we expected the employment situation to stabilise at pre-pandemic levels this year as vaccination rates rise and more workers return to the labour market.”
However, the number of people who were not economically active for reasons other than discouragement increased by 264 000 between the two quarters, resulting in a net increase of 210 000 in the population not economically active.
As a result, Nedbank economist Johannes Khosa said the outlook for the job market remained uncertain, given the prevailing headwinds.
Khosa said adverse labour market conditions, including frequent labour strikes, high wage demands, high input costs and power shortages continued to discourage private sector investment, constraining job creation.
“Meanwhile, the labour force continues to rise, which implies that a meaningful reduction in the unemployment rate will be difficult in the short term,” Khosa said.
“South Africa will only achieve a significant unemployment rate reduction through more robust and sustained economic growth. (Nedbank) expects GDP to grow by an annual average rate of around 1.5% from 2022 to 2025, which is too low to reduce the unemployment rate meaningfully.”
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