SA economy continues to face headwinds that weigh on employment: Economists

Economists say South Africa’s economy still faces a number of local and international headwinds that are expected to weigh down on employment well into next year.

Their comments come as Statistics South Africa prepares to release the third quarter job numbers in its Quarterly Labour Force Survey on Tuesday.

The official unemployment rate was recorded at 33.9 % in the second quarter; however, the rate is even higher according to the expanded definition, recording at just over 44 % in the second of the year.

Analysts say among the multiple challenges facing the country, the current electricity crisis stands out as a major deterrent for the kind of investments that can create jobs.

An Economist at Econometrix, Laura Campbell says the government needs to move with speed to implement some of the outstanding economic reforms in order to grow the economy and create employment.

“South Africa is structurally characterised by a high unemployment rate, now this in conjunction with rising interest rates and ongoing elevated inflation is a recipe for ongoing social unrest, so while there may have been some recovery in Q3 following the effects of the destructive floods in Q2 we’re still looking at a high unemployment rate and we have seemingly permanent load shedding which is weighing on confidence amid a slowdown in domestic and global growth.”

An Economist at ABSA bank, Miyelani Maluleke adds that the rate at which the economy is anticipated to grow next year may not be enough to create jobs.

“Again I think it’s going to be a function of how quickly the economy grows, we are expecting the economy to grow by 1,6% next year and that should deliver some employment creation but 1,6% in terms of GDP growth is still not strong enough for us to meaningfully reduce the scale of joblessness given the fact that you have more and more people entering the labour force every single year,” says Maluleke.

The Quarterly Labour Force Survey continues to show that young people remain vulnerable in the labour market.

The total number of unemployed youth aged 15-34 stands at 4, 8 million or 46,5 %.

VIDEO: A look at the economic week with Tshepo Mongoai [embedded content]