Unemployment rate rises to 27.6%, nears 15-year high
South Africa's unemployment rate increased to 27.6% in the first quarter of 2019, Stats SA announced on Tuesday morning.
The jobless rate at the end of the fourth quarter of 2018 was 27.1%, meaning the rate has increased by half a percentage point.
According to the Quarterly Labour Force Survey for the first quarter, there are 16.3 million employed people and 6.2 million unemployed people between the ages of 15 and 64 years in South Africa.
The unemployment figures were broadly in line with the estimates of analysts.
Ahead of the announcement on Tuesday, NKC African Economics projected an unemployment rate of 27.4%.
Investec's Kamilla Kaplan, meanwhile, predicted last week that the figures could show a rise in the unemployment rate to 27.5%. "The unemployment rate typically rises in the first quarter of the year as temporary employees hired in the service sector over the festive season are typically laid off," she noted.
Sluggish economic growth
Bloomberg reported that SA's jobless rate has not fallen below 20% since at least 2000, largely due to sluggish economic growth. Gross domestic product hasn’t expanded by more than 2% a year since 2013 and economists say GDP must rise by 3% to 5% annually for the unemployment rate to recede.
President Cyril Ramaphosa’s appetite to impose tough economic reforms will be tested in the coming weeks as he streamlines his cabinet and appoints ministers to key departments. Ramaphosa, who led the ANC to a sixth straight election victory at the weekend, pledged growth of as much as 5% a year in his campaign for leadership of the party.
“At this stage, there is too much slack in the labour market and this will remain the status quo until structural reform takes hold,” Mamello Matikinca, the chief economist at FirstRand’s First National Bank unit, said before the release.
All sectors barring manufacturing, trade and transport cut employment. At 142 000, the construction industry cut the most jobs while financial services trimmed 94 000 positions.
In a statement on Tuesday afternoon in reaction to the jobs numbers, the government said the high rate of unemployment was a "serious concern".
It said a number of interventions were being implemented to "revive and stimulate economic growth," including the Youth Employment Service, jobs summits, the president's 2018 economic stimulus recovery plan, and investment conferences.
"The successful 2019 National and Provincial elections builds on the new wave of renewal and positive change that is sweeping across our nation. It reaffirms the stability that investors have been accustomed to since the start of our democracy."