SA unemployment stays stubbornly high at 2008 rates

By Prinesha Naidoo and Ray Ndlovu

(Bloomberg) – South Africa’s unemployment rate remained near the highest in at least 11 years in the fourth quarter as trade and manufacturing shed jobs.

The jobless rate was 29.1%, unchanged from the three months through September, Statistics South Africa said in a report released on Tuesday in Pretoria. That matched the median estimate of four economists in a Bloomberg survey.

Key insights:

  • Trade shed 159,000 positions and manufacturing 39,000 in the period as businesses were hamstrung by the deepest power cuts yet by Eskom.
  • The unemployment rate in Africa’s most-industrialised economy has remained above 20% for at least two decades, largely due to insufficient economic growth and with expansion projected at less than 1% this year by the International Monetary Fund, joblessness is likely to remain elevated. In the first three weeks of 2020, South African companies including Telkom and Walmart’s local unit Massmart announced thousands of potential job cuts.
  • The persistently high unemployment rate poses a challenge for President Cyril Ramaphosa as he prepares to deliver his state-of-the-nation address on Thursday. Joblessness has added to social tensions that dent the country’s status as an investment destination and erode business confidence.
  • The number of employed people rose by 45,000 in the fourth quarter as the finance industry and community and social services added positions. This could reflect an increase in temporary jobs over the festive season and such an increase is typically reversed in the first quarter.