SA’s employment increased, but the unemployment rate remains high

Thanda Sithole

The Quarterly Labour Force Survey (QLFS) data (a household-based employment survey, not seasonally adjusted) showed that the official unemployment rate fell slightly to 32.6% in 2Q23 from 32.9% in 1Q23.

Despite a moderate fall in 2Q23, the official unemployment rate remains stubbornly high and above the pre-pandemic average of 25.5%. The level of unemployment declined marginally by 0.1% q/q (or 11 375) and by 0.9% y/y, to 7 921 374.

Encouragingly, the recovery in employment continued, with the economy adding 153 914 jobs in 2Q23, reflecting a 1.0% quarterly increase. Employment was 784 335 jobs higher compared to the second quarter of last year. Although still below the pre-pandemic 4Q19 level by about 74 075, the employment recovery has been resilient despite enormous economic challenges. Detailed data indicates that it is the private household sector that has dragged on the overall recovery, reflecting mounting cost-of-living pressures. Meanwhile, the recovery in the formal non-agricultural sector is effectively complete. Overall, the economy has been cumulatively adding jobs since 4Q21, to the tune of 2 064 186.

Key sectorial figures:
The increase in quarterly employment was broad-based, with six out of ten sectors recording job gains. Meanwhile, annual employment gains were recorded across all sectors, bar the private household sector.

• The agricultural sector added 6 825 job q/q and 20 624 y/y in 2Q23.
• Mining and quarrying gained 30 924 jobs q/q and 36 116 y/y.
• Manufacturing shed 96 260 jobs q/q but gained 51 124 y/y.
• Electricity, gas and water supply shed 5 755 jobs q/q but added 25 337 jobs y/y.
• The construction sector added the most quarterly jobs (103 815) and a modest annual gain of 127 572 jobs.
• Wholesale and retail trade, motor trade, hotels and restaurants gained 91 746jobs q/q and 197 714 jobs y/y.
• The transport, storage and communication sector shed 6 504 jobs q/q, but gained 79 668 jobs y/y.
• Financial intermediation, insurance, real estate and business services shed 68 066 jobs q/q but added 139 004 jobs y/y.
• Community and social services gained 62 830 jobs q/q and 143 688 jobs y/y.
• The private household sector added 37 202 jobs q/q but shed 30 478 jobs y/y.

Outlook: employment recovery clouded by prevailing economic uncertainty
The domestic labour market has shown signs of resilience, adding over 2 million jobs since 4Q21. Although employment recovery remains incomplete in the private household sector, recovery in the critical formal non-agricultural sector is complete. However, the prevailing economic weakness alongside the dynamic impact of load-shedding poses a downside risk to the ongoing labour market momentum. The domestic economy is expected to stagnate at 0.2% this year, following 1.9% growth in 2022, before gradually recovering 1.8% by 2025. More employment gains are required to reduce the unemployment rate amid a growing population. Combined with human capital investments, this will be key in lifting potential growth in the long run.