Unemployment rise adds to Ramaphosa's economic woes

The unemployment rate increased by 0.3 of a percentage point to 27.5% in the second quarter of 2018, according to the Quarterly Labour Force Survey released by Statistics South Africa on Tuesday.

It's the second consecutive quarter-on-quarter increase in unemployment and comes as President Cyril Ramaphosa is campaigning to boost the economy and increase employment while the government faces severe fiscal constraints.

The number of unemployed persons increased by 127,000 in the third quarter of 2018 after it rose by 102,000 in the second quarter.

While five provinces saw increases in employment, they were undermined by declines in Northern Cape, KwaZulu-Natal and Western Cape.

The formal sector accounted for most job losses. Manufacturing saw 29,000 jobs lost; mining lost 27,000; transport lost 23,000 and construction 21,000. Only the finance and trade industries saw increases in employment in the formal sector.

Year-on-year comparisons to 2017 offer little signs for optimism. The unemployment rate in the third quarter of 2017 was 27.7%, which dropped significantly to 26.7% in the following quarter. It remained unchanged in the first quarter of 2018 before rising in the second and again to the latest figure of 27.5%, slightly lower than a year ago.

The informal sector is currently creating the most jobs. In the third quarter, 188,000 jobs were added and almost all informal industries added jobs compared to 2017.

The expanded unemployment rate, which also considers discouraged job seekers, also rose in the third quarter by 0.1 of a percentage point to 37.3%, with Free State and Limpopo leading the jobless charge. It was 0.5 of a percentage point higher than at the same time last year.

The situation is particularly dire for youth. The percentage of those aged 15 to 34 who are not in employment, education or training increased by 0.7 of a percentage point to 39% in the last year.

That means almost four in 10 youths are not in work, schooling or training. The worst affected of all unemployed are those with lower levels of education. Over 50% of unemployed people have not completed matric, while 35.1% of unemployed people's highest qualification is matric.

The third quarter covers July to September and the latest figures do not reflect on the impact of Ramaphosa's stimulus package, announced in late September, his jobs and investment summits, both held in October, or the medium-term budget policy statement (MTBPS), delivered by Finance Minister Tito Mboweni last week.

The jobs summit saw companies, labour and government commit to saving jobs, but few new initiatives were announced. At the investment summit, Ramaphosa said his efforts to grow the economy have secured R290-billion in investments and up to R400-billion in pledges to invest.

Ramaphosa's efforts have so far failed to make concrete improvements, with unemployment rising in two consecutive quarters and GDP declining, slipping the country into a technical recession.

Mboweni's MTBPS outlined plans over the next two years to raise GDP to 2%, with the budget shifting money to areas government hopes will have the most impact. Mboweni and Ramaphosa have focused on harnessing private sector investment and both are popular with business leaders.

The charm offensive, however, needs to be backed up by facts and future Stats SA reports will be able to indicate whether the efforts to woo private investment translates into improved livelihoods for South Africans. DM