The unemployment rate reached 32.1%, according to the latest report from Stats SA. Unemployment, a long-standing issue in many nations, not only represents an economic burden but also a significant blow to social stability.
Lack of work directly affects individuals by depriving them of income, generating financial stress, insecurity, and often leading to precarious living conditions.
In South Africa, a nation that has faced persistent challenges regarding employment and economic inequality, a concerning phenomenon was observed in the last quarter of 2023.
After eight consecutive increases in employment rates, the country experienced a significant drop, marking a setback in efforts to address this issue
According to figures revealed by Stats SA, a decline in employment was recorded during the last quarter of the previous year, affecting 22,000 people – placing the number of employees at 16.7 million – which raised the official unemployment rate by 0.2 percentage points reaching 32.1%.
Although the expanded unemployment rate showed a slight decrease of 0.1%, reaching 41.1%, these figures reflect a stark reality: 7.9 million people are unemployed according to the official rate, while the expanded rate encompasses 11.7 million individuals.
In its analysis, Stats SA reported an increase in the number of unemployed people over the last decade, rising from 4.8 million in the fourth quarter of 2013 to 7.9 million in the same period of 2023, representing an increase of 3.1 million individuals without work.
Even though pre-Covid-19 employment levels have been surpassed, with a greater number of people employed, the unemployment rate remains significantly high.
It is crucial to note that during the pandemic year, unemployment stood at 30.1% in the first quarter of 2020, which is 2 percentage points lower than the current figure. This highlights that current job creation is not aligned with the number of people actively seeking employment, thus underscoring the persistent gap in the South African labor market.
Additionally, the report details that in the fourth quarter of 2023, the number of unemployed increased by 46,000 people specifically, reaching a total of 7.9 million, while those inactive for reasons other than discouragement increased by 218,000, reaching 13.4 million “Not Economically Active” (NEA) individuals.
There was also a reduction of 107,000 discouraged job seekers compared to the previous quarter, resulting in a net increase of 111,000 people in the economically inactive population.
Stats SA also communicated that the formal sector in South Africa, which represents 68.7% of total employment, experienced a decrease of 128,000 jobs between the third and fourth quarters of 2023.
This decline was more pronounced in key areas such as Services (-171,000), Construction (-36,000), and Agriculture (-35,000). On the other hand, notable increases were observed in sectors such as Finance (+128,000), Transportation (+57,000), and Mining (+37,000), indicating some stability and growth potential in specific areas of the South African economy.
In this context, young people aged 15 to 34 are particularly vulnerable to unemployment compared to older age groups, considering that around 3.4 million teenagers, representing 33.0% of the 10.2 million individuals in this age group, were in the category of ” Not in Education, Employment or Training” (NEET).
Regarding regional dynamics, the unemployment rate showed variations among South African provinces. There was an increase in six provinces, including Western Cape, Northern Cape, KwaZulu-Natal, Gauteng, Northwest, and Eastern Cape, between the third and fourth quarters of the year.
On the other hand, it decreased in Limpopo, Mpumalanga, and Free State, indicating significant differences in labor and economic conditions at the regional level within the country.
Regarding unemployment by educational level, a mixed situation is observed. During the fourth quarter of 2023, the figure for graduates experienced an increase of 1.1 percentage points, reaching 9.6%, compared to 8.5% recorded in the previous quarter.
Meanwhile, those with less education, represented by an unemployment rate of 38.6%, continue to be particularly vulnerable, with a number significantly exceeding the official unemployment rate in South Africa.
Desiree Manamela, head of labor statistics at Statistics South Africa, described what happened in the last quarter of the previous year as an unusual situation. “In previous periods, we saw job creation mainly due to what happens in trade during the holiday season,” she said.
This situation may also have contributed to the increase in demand for personal loans among those affected by job loss and income reduction. At this point, it is crucial that people have more access and can use loan comparison platforms, thus exacerbating the economic and social challenges facing the nation.
IMF Projections for Unemployment
In 2023, according to an analysis carried out by Statista, South Africa recorded the highest unemployment rate globally, reaching a worrying 28.4%. In this line, it is worth noting that nine of ten countries with the highest rates were located in the sub-Saharan Africa region.
“An important factor of unemployment in these countries is conflict. In particular, internally displaced persons want to work, but moving to another part of the country disrupts their business network and moves them to a local economy with a different labor demand. Countries with low levels of economic development, as approximately indicated by a low GDP per capita, often have fewer opportunities in the labor market, leading to high unemployment rates,” the research states.
However, the scenario does not seem to have a better future, as the latest World Economic Outlook report from the International Monetary Fund (IMF) predicts that unemployment percentage in South Africa will continue to deteriorate worryingly. It is expected that the number will increase to 33.5% this year and worsen further, reaching 33.9% by 2025.
This situation is alarming, especially considering that of the over 100 countries analyzed in the IMF report, only Sudan had a higher figure than South Africa, reaching a staggering 46% and projected to increase to 48.2% by 2025
Additionally, the organization lowered its growth expectations for South Africa in 2025, reducing its projections by 0.1 percentage points to reach 1.2%. Likewise, for this year, it forecasts a real GDP growth rate of 0.9%.
These changes reflect the country’s persistent struggle against slow economic growth, as well as its ongoing confrontation with high inflation, which is expected to average 4.9% in 2024.
SOURCES:
- Stats SA
- Quotes Advisor digital platform
- International Monetary Fund
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