For more than 30 years, unemployment has been extremely high in the South African economy. The country's economy is unable to create enough jobs for its growing workforce. This is partly due to economic growth stagnating at just 1.7% in the 2010s (and even lower at 0.9% from 2015 to 2019).
Another factor that has limited the economy's ability to create jobs fast enough to absorb new job seekers and previously employed people is that imposed during the coronavirus (Covid-19) pandemic. This was due to restrictions.
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Read: South Africa's unemployment rate rises as farm jobs are cut
Compared to the global financial crisis of 2008/2009, its impact was much greater. Approximately 600,000 jobs have since been lost in South Africa. A staggering 1.5 million jobs were lost during the coronavirus restrictions.
We investigated the labor market during the lockdown period. We compared the quarterly labor force survey data released by Statistics South Africa for the first quarter of 2020 and the second quarter of 2022. The first quarter of 2020 was the last survey before the pandemic hit the country. The Q2 2022 survey was conducted just before all remaining lockdown restrictions were lifted.
Read: How has the unemployment rate changed since 2000?
To complement our findings, we also analyzed survey data from the most recently published third quarter of 2023 to determine whether the most vulnerable groups have recovered and their labor market outcomes are at least as strong as COVID-19. I checked to see if it had returned to its previous level.
We found that employment numbers (according to Q3 2023 data) have recovered to pre-pandemic levels. However, this proved insufficient to keep up with the growing number of new working-age people entering the workforce. This finding is once again consistent with labor market performance over the past 30 years.
This means job creation will not be rapid enough to absorb all job seekers.
It also found that most of the gains from the economic recovery went to semi-skilled and skilled workers, excluding unskilled workers and workers with less than 12 years of education, who make up more than 40% of the workforce. found. These are the people who have been hit hardest by pandemic-related job losses. (For those not eligible to leave school, unemployment increased by more than 200,000 people in absolute terms even after lockdown restrictions were lifted.)
Read: Few jobs in SA for out-of-school (black) people
This is a repeat of the pattern of the past 30 years. This means that South Africa's unskilled and low-educated (beyond Grade 12) people are being left behind in terms of employment opportunities.
lockdown
Comparing the first quarter of 2020 (just before the lockdown started) and the second quarter of 2022 (the end of the lockdown), employment decreased by 822,000 people (from 16.42 million to 15.59 million). The unemployment rate rose from 30.1% to 33.9%.
The population groups that lost the most jobs included Africans aged 25 to 44 who did not have a grade 12 degree and those who previously held menial jobs. These include handicrafts and related occupations, elementary occupations, and domestic workers.
During the same 2.25 years, the number of unemployed people increased by almost 1 million people, from 7.07 million to 7.99 million.
In fact, the total number of unemployed people in the second quarter of 2022 was 7.99 million, the highest ever in the South African labor market.
Meanwhile, the unemployment rate rose from 30.1% to 33.9% (this rate reached its peak level of 35.2% in the fourth quarter of 2021).
African men aged 15 to 44 without a post-secondary education qualification and no previous work experience suffered the largest increase in unemployment.
after lockdown
The latest Q3 2023 data reveals two encouraging findings.
First, the number of employees increased to 16.78 million people, exceeding the level of 16.42 million people in the first quarter of 2020 (just before the coronavirus outbreak).
However, the increase in employment of 340,000 people was lower than the increase in the labor force over the same period (from 23.48 million to 24.63 million, an increase of 1.15 million people).
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The second encouraging finding is that the unemployment rate showed a gradual downward trend, falling from an all-time high of 35.2% in Q4 2021 to 31.9% in Q3 2023. Nevertheless, the latter's unemployment rate is still the same as the unemployment rate recorded before 2020 (less than 30%).
Moreover, 31.9% remains significantly above the key labor market targets of the New Growth Path. It was launched in November 2010 and aims to increase economic growth, job creation and equity. The goal was to reduce the unemployment rate to 6% by 2030.
Given the dire and chaotic state of the economy during the lockdown, this 6% target was unofficially and temporarily “suspended” without any official announcement. However, the goal remains the same. But that's a tall order.
To achieve South Africa's unemployment rate, the unemployment rate needs to fall by around 3.7 percentage points per year between 2023 and 2030.
It is clear that such a rapid decline over the next seven years is highly unlikely.
One concerning finding was that the total unemployment rate decreased only slightly. This number remained extremely high in the third quarter of 2023 at 7.85 million. This is not far from the record high of 7.99 million people in the second quarter of 2022.
This means that although job creation resumed after lockdown restrictions were lifted, it was not sufficient to absorb the rapidly increasing number of people entering the workforce. As a result, unemployment increased.
This is what was happening in this country's labor market before the coronavirus outbreak.
Finally, between the first quarter of 2020 and the third quarter of 2023, employment actually increased slightly by nearly 400,000 people. Most of the increase was among African women aged 45 to 54 living in urban areas in two provinces: the Western Cape and KwaZulu-Natal. They have a Grade 12 secondary school diploma (or above) and are employed in a highly skilled or semi-skilled occupation in the financial, community, social services or personal services industry. Ta.
This finding is consistent with structural changes in the country's economy, with a growing demand for highly educated and highly skilled workers in the labor market.
road ahead
The survey results show that South Africa's labor market has emerged from its worst conditions in history and is gradually improving in many aspects.
However, two worrying but expected findings show that while most of the post-COVID-19 job growth has gone to highly skilled and highly educated people, unemployment remains high. That's true.
The long-term challenge is how people with relatively low skills and education (some of whom lost their jobs during the lockdown period) can find work again (e.g. as informal entrepreneurs). through the promotion of activities). Failure to do so may result in chronic unemployment and long-term unemployment.
This article is based on a magazine article that I co-authored with Jade Botha, a graduate of the MSc economics program at the University of the Western Cape.
Derek Yu, Professor of Economics, University of the Western Cape
This article is republished from The Conversation under a Creative Commons license. Read the original article.
