Friday, January 21

Very few job seekers will find work


When Statistics SA released its Quarterly Labor Force Survey (QLFS) for the first quarter of 2021, it noted that the unemployment rate had risen to the highest level since it began conducting the survey in 2008.

Read: Unemployment: No light at the end of the tunnel (June 2021)

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When statisticians announced the survey results for the second quarter of 2021 on Tuesday (Aug 24), the figures showed that this quarter was even worse and unemployment set a new record.

“The official unemployment rate increased by 1.8 percentage points from 32.6% in the first quarter of 2021 to 34.4% in the second quarter of 2021, the highest since the start of the QLFS in 2008,” according to the report. “The unemployment rate according to the expanded definition of unemployment increased to 44.4%.”

The severity of the problem

Unfortunately, even the very high unemployment rate hides the severity of the unemployment problem in South Africa. A look at the gross numbers paints an even worse picture than the Stats SA report admits.

The total number of people of working age (defined as 15 to 64 year olds) increased by a reasonable 1.5% over the past year, from about 39 million to about 39.5 million, according to the survey.

However, there was a large increase in the number of participants in the labor market. The workforce increased by more than 4.3 million people to 22.2 million compared to 18.4 million a year ago.

Thus, the number of people available for work and who should possibly work, increased by more than 4.3 million in just 12 months. In contrast, Stats SA found that the economy could only create 793,000 new jobs in that time.

“The number of unemployed increased by 82% [3.5 million], while the number of people who were not economically active decreased by 18.2% or 3.7 million ”, stated Stats SA.

This large increase in the number of new entrants to the labor market made Stats SA look for reasons.

The report notes that special tabulations were made to study movements between labor market categories. “It was observed that a large number of people went from the ’employed’ and ‘not economically active’ category to the ‘unemployed’ category between the two quarters.”

Closures

In reality, this means that people lost their jobs, while others who previously did not have to work had to start looking for work to make ends meet during recent difficult economic circumstances.

Johannes Khosa, a specialist economist at the Nedbank Group, says the latest unemployment figures are another indication of the impact the Covid-19 lockdown has had on the economy.

“Companies were reluctant to hire more people and, in worse situations, they even laid off more workers,” says Khosa.

“As a result, more jobs were lost during the quarter.”

Impact by sector

Khosa notes that the formal sector cut 375,000 jobs during the quarter to June. Employment in the formal sector fell from just under 15 million jobs to less than 14.15 million.

The hardest hit was the financial industry, for decades the industry that created many new jobs and good careers for workers of almost any level.

Quarterly and interannual changes in the formal sector by industry

Source: Stats SA

Stats SA noted that employment gains were seen in some sectors during the recent quarter compared to the previous one.

The informal sector created 184,000 new jobs, the agricultural sector 69,000 and private households 67,000.

However, it can be argued that the large increase in employment in the informal sector is due more to need than anything else.

Losing the battle

An analysis of the long-term data provided as an annex to the QLFS report reinforces the view that SA is losing the battle against unemployment.

The Labor Force Survey, based on South African Household Surveys rather than the Quarterly Employment Survey (QES), which surveys registered businesses, shows that the number of unemployed has risen steadily year after year since the beginning of the whole. of data in 2008.

Population, active population, employed and unemployed

Source: Historical data from Stats SA

The population has been growing steadily. Although data from multiple sources shows that SA’s population growth is slowing, the workforce is growing faster due to the specific demographics of SA’s fairly young population.

Literally hundreds of thousands of young men and women finish school, college, and other institutions of higher education each year and enter the workforce.

It is immediately apparent from the graph that the increase in employment lags behind the growth of the labor force. The number of unemployed continues to rise.

The rise in the unemployment rate tells only part of the story

Stats SA notes that one of the reasons for the recent rise in the unemployment rate is an increase in the labor force participation rate.

In short, the number of people who want to work increases.

Comparing the number of people employed with the population of people of working age gives a rough idea of ​​the big picture. Expressed as a percentage, it shows that the employment of all people who could work fell from 46% in 2008 to less than 38% in 2021, whatever the reason for not working.

Employment as a percentage of the working-age population

Source: Calculation based on data from Stats SA

A sharp decline in this “general” employment is evident after the 2008 financial crisis. Equally notable is that this was followed by only a partial recovery. Then Covid-19 hit. Lasted.

panorama

The future does not require sunglasses. As Khosa says, the outlook for the job market remains poor.

“The moderate economic conditions mean that it will take a long time to repair the damage caused by the economic blockages.” he says.

“There is not going to be an increase in job creation in the short term. Companies are still hesitant to expand their operations. ”

Khosa adds that the long-term prospects are not so good either.

He mentions that continued energy shortages and uncertainty regarding government policy will continue to impact business confidence, economic growth and employment.

Read: Will SA ever solve its unemployment problem?

Another factor that will keep the unemployment rate high in the long run is that discouraged job seekers are sure to re-enter the job market and start looking for work once the economy begins to recover.

Stats SA says there are currently more than 3.3 million discouraged job seekers.

Destructive impact of Covid and closures

NWU Business School economist professor Raymond Parsons says the new record 34.4% in South Africa’s unemployment rate confirms the destructive impact that the Delta variant and accompanying lockdown restrictions have had on the economy and the market. labor.

“The outlook for the labor market remains weak as it is clear that the full impact on economic activity of the civil unrest in late July will only become apparent in the third quarter of 2021. The full economic costs of violence and recent civil unrest has not yet fully emerged.

“In these negative circumstances, unemployment is now in fact the ‘cruelest tax’ on vulnerable sections of the population and job creation continues to demand the highest priority,” says Parsons.

“However, there is no ‘quick fix’. Given the current uncertainties in the economic outlook, the immediate overall employment situation is likely to worsen before improving. ”

Parsons adds that the latest unemployment figures send a message that the balance between lives and livelihoods in managing the pandemic remains an acute dilemma “that must be managed carefully” going forward.

The availability of manpower should be a boon for any economy.

Unfortunately, it seems to be just a problem for SA.

Listen to Ryk van Niekerk’s interview with FIU spokesperson Makhosonke Buthelezi (or read the transcript here):


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