by Arabile Gumede and Thembisile Dzonzi
(Bloomberg) — South Africa’s jobless rate rose to a new record in the third quarter as more people started looking for employment.
The jobless rate rose to 27.1 percent in the quarter through September, the highest in at least eight years, from 26.6 percent in the previous three months, Statistics South Africa said in a report released Tuesday in the capital, Pretoria. The median of six economist estimates compiled by Bloomberg was 26.6 percent. The number of people without jobs rose by 239,000 to 5.9 million while those employed increased by 288,000 to 15.8 million.
South Africa has struggled to rein in unemployment after the 2009 recession as economic growth stayed below 3.5 percent annually and is projected by the government to slow to 0.5 percent this year. The sluggish economy, policy uncertainty and rigidities and instability in the labor market are some of the factors that rating companies like Moody’s Investors Services and S&P Global Ratings Ltd., which will publish their assessment of the nation’s creditworthiness in the next two weeks, have highlighted as risks.
“While you still have lots of people looking for jobs and new entrants to the labor market, companies appear to be stepping up their cost-cutting programs and what that means is that we are not seeing the uptake of new employment,” Kevin Lings, chief economist at Stanlib Asset Management Ltd., said by phone before the release of the data. “It’s part of the overall concern of the ratings agencies.”
Also read: SA’s sideways economic slide makes downgrade ‘inevitable’
A panel of experts commissioned by the National Economic Development and Labor Council, known as Nedlac, which promotes negotiations among labor unions, government and business, recommended on the weekend that a minimum wage of R3,500 ($246) a month to be phased in over two years. This is part of a plan to stabilize the labor market and retain an investment-grade credit rating. The nation’s biggest union has rejected the proposal.
South Africa has the highest jobless rate of more than 60 emerging and developed countries tracked by Bloomberg. The economy needs to expand at 7.2 percent a year from 2018 to achieve the government’s goal of reducing the jobless rate to 6 percent by 2030, the World Bank said in February. Finance Minister Pravin Gordhan projected output growth of 2 percent and 2.2 percent for 2018 and 2019 in his October mid-term budget.
