SA jobless rate falls to lowest level in two years

South Africa’s unemployment rate fell to its lowest level in almost two years in the fourth quarter, an outcome that may be short-lived as record power cuts discourage investment and stifle economic growth.

The official jobless rate decreased to 32.7% in the three months through December from 32.9% in the previous quarter, Statistics South Africa said Tuesday in a report released in the capital, Pretoria. That was marginally higher than the 32.6% predicted by six economists in a Bloomberg survey.

The boost in jobs was mainly driven by the finance sector, particularly among labour brokers and the security industry, said Desiree Manamela, the chief director of labor statistics. That was followed by private households and the trade industry.

The unemployment rate according to the expanded definition, which includes people who were available for work but not looking for a job, stood at 42.6%, compared with 43.1% in the September quarter.

The pace of job creation is expected to moderate in 2023, before rising gradually over the medium term, the National Treasury said in its budget review released last week. Economists in a Bloomberg survey predict the unemployment rate will increase in the next three quarters before easing in the final three months of this year.

Telkom has already warned that it may cut about 1 800 jobs. The Post Office, British American Tobacco South Africa and Naspers have also announced plans to retrench staff.

Africa’s most industrialised economy is experiencing its worst bout of power rationing yet, with outages occurring for more than 200 days in 2022 and every day this year because state power utility Eskom can’t meet demand from its old and poorly maintained plants. Last week it cut more than 7 000 megawatts from the national grid, a new record.

The central bank estimates that the electricity crisis is costing the economy as much as R899 million a day. The bank and the Treasury have cut their economic growth forecasts to 0.3% and 0.9% respectively as a result of the outages.

The high unemployment rate increases pressure on the Treasury to extend a R350 rand monthly stipend beyond March 2024, a payment that was first introduced three years ago to cushion the poor against the fallout of the coronavirus. The government is also considering replacing the payment with a permanent basic income grant, a move that would threaten the sustainability of the public finances unless it is funded by higher taxes or increased revenue from stronger economic growth.

Key figures:

• Finance industry added 103 000 jobs
• Private households gained 54 000 jobs
• Trade industry added 52 000 jobs
• Mining added 30 000 jobs
• Manufacturing added 26 000 jobs
• Community, social services lost 122 000 jobs
• Agriculture cut 12 000 jobs
• Construction shed 12 000 jobs
• Employed increased by 169 000 to 15.9 million, still below pre-Covid levels

Employment by industry

Labour market measures per province for Q4: 2022