Unemployment rate hits 29.1%; while youth joblessness a national crisis – Lings

By Kevin Lings*

Stats SA released the Labour Force Survey (LFS) for Q3 2019 today. The LFS is a quarterly household survey specifically designed to measure the dynamics of employment and unemployment in South Africa, including the informal sector as well as small-scale subsistence farmers. The following is a summary of the key trends in the labour market as at the end of Q3 2019 (see charts attached for further information).

In Q3 2019, there were 38.582 million people aged between 15 and 64 years in SA (up 149,000 relative to Q2 2019, and up 597,000 over the past year).

Among these people:

  • 23.109 million were economically active (up 141,000 relative to Q2 2019, and up 519,000 year-on-year)
  • 16.375 million were employed (up 62,000 relative to Q2 2019, but down 5,000 year-on-year)

6.734 million were unemployed, which is another record high (up 78,000 relative to Q2 2019, and up 524,000 year-on-year), which equates to an official unemployment rate of 29.1%, up from 29.0% in Q2 2019. SA’s unemployment rate is the highest recorded since the current data series started and extremely high by international standards. Overall, the higher unemployment rate reflects the poor state of the economy, especially the lack of fixed investment spending.

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As mentioned above, the number of unemployed people rose by a very concerning 524,000 over the past year to 6.734 million. This excludes the number of discouraged workers, which in Q3 2019 totalled 2.793 million. Adding the discouraged workers to the official number of people unemployment suggests that 9.527 million people in South Africa are effectively unemployed, equating to an expanded unemployment rate of 38.5%. This is the highest number of unemployed people ever recorded in South Africa. In addition, the unemployment rate for the youth (younger than 25), is 58.2%. This jumps to a massive 70% if you included discouraged workers. Clearly, the rate of youth unemployed has become a national crisis, with significant social, economic and political implications, yet the political environment appears to lack the level of urgency required to start to deal with the crisis.

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It is worth noting that the LFS relies on a relatively small sample size and correspondingly has a high potential sample error associated with any quarterly report. Furthermore, the unemployment data is not seasonally adjusted. Consequently, gauging the underlying trends in the labour market are more important and reliable than focusing on the specific quarterly change in employment – either positively or negatively.

As we have started perpetually for a long time: on a trend basis, South Africa’s labour market continues to deteriorate. Fundamentally, this reflects the lack of fixed investment spending by the private sector, as well as the sustained low business confidence. Furthermore, the high rate of unemployment contributes to much of the social tension, inequality and anguish experienced in South Africa on a daily basis, especially among the youth. Increasing employment in South Africa has to be the number one economic/political/social objective, and can only be resolved meaningfully through a concerted and sustained effort to improve skills development as well as encourage private sector fixed investment spending, business development and entrepreneurship.

  • Kevin Lings, chief economist, Stanlib.