South Africa’s unemployment rate decreased by 1.4 percentage points to 32.1% in the third quarter, from 33.5% in the second quarter.

The expanded unemployment rate, which includes discouraged work seekers, decreased by 0.7 of a percentage point to 41.9%, compared with 42.6% in the second quarter.

Statistics South Africa (Stats SA) finds in its latest Quarterly Labour Force Survey (QLFS) that the number of employed persons increased by 294 000 to 16.9-million in the third quarter, compared with the second quarter. 

There was a decrease of 373 000 in the number of unemployed persons to eight-million in the quarter. 

Overall there was a decrease of 79 000, or 0.3%, in the labour force.

Discouraged work-seekers increased by 160 000, marking a 5% increase, while the number of persons who were not economically active for reasons other than discouragement increased by 54 000, or 0.4%, quarter-on-quarter.

This led to an increase of 214 000 in the total not economically active population to 16.5-million.

Notably, the number of people employed in the formal sector increased by 122 000 in the third quarter, while informal sector employment also increased by 165 000 over the same period.

The largest increases in employment were recorded in community and social services with 194 000 new jobs, followed by construction with 176 000 new jobs and trade with 109 000 new jobs.

Public Works and Infrastructure Minister Dean Macpherson expressed encouragement at the fact that the construction sector rebounded with such a large increase in jobs over the two quarters. “This shows there are many green shoots within the construction industry, with additional reforms underway to increase investment and job,” he stated.

Collectively, the measures that government is implementing will see a significant increase in the number of construction projects in the country, including the Infrastructure South Africa agency becoming a single port of entry for all major infrastructure projects in South Africa, reformed regulations around public-private partnerships, expanding the role of the Infrastructure Fund to attract private-sector funding and more project preparation financing to accelerate early-level construction projects.

Meanwhile, decreases in employment of 189 000, 32 000, 20 000 and 18 000 were recorded in the finance, private households, manufacturing and transport segments, respectively.

Stats SA also finds that the largest increases in employment in the third quarter were noted in the Eastern Cape with 83 000 new jobs, the Western Cape with 75 000 new jobs and North West with 69 000 new jobs.

Decreases in employment were, however, recorded in Gauteng and KwaZulu-Natal, with these provinces having lost 66 000 and 2 000 jobs, respectively.

Stats SA says young people between the ages of 15 and 34 remain the most vulnerable in the labour market, despite the third quarter labour force survey results showing the total number of unemployed youth decreased by 171 000 to 4.8-million, while employed youth recorded an increase of 66 000 to 5.8-million.

The youth unemployment rate decreased slightly from 46.6% in the second quarter to 45.5% in the third quarter.

Deputy Minister in the Presidency Nonceba Mhlauli said the unemployment rate reduction marked a good step forward for the economy, attributing the decline to the hard work and dedication of government in working with all stakeholders to effect Operation Vulindlela and the Economic Recovery and Reconstruction Plan.

According to Nedbank, the sectoral breakdown of the QLFS showed mixed performances. The bank explained that employment in the construction sector likely rose on the back of increased fixed investment activity as the structural constraints within the sector started easing, while jobs in domestic trade were supported by firmer consumer demand and ongoing recovery in household incomes - on the back of lower inflation.

Employment in agriculture also improved as the impact of the drought faded. Similarly, the mining sector created jobs, albeit at a slower rate, reflecting modest improvement in global demand and commodity prices.

In contrast, the finance sector shed 189 000 jobs as credit growth remained weak and impairments elevated, Nedbank said.

In the year-to-date, employment grew by 2.2% year-on-year with 503 000 jobs having been created compared with the same period last year. The pace of job creation nonetheless still outpaced the growth in the labour force, the bank added.

The outlook for the job market looks more promising, especially as economic growth is poised to increase over the next 12 to 18 months.

"Trading conditions have already improved significantly, with loadshedding having been suspended and logistics networks improving on efficiencies. Easing supply-side constraints, coupled with relatively steady global demand, should support employment in agriculture, mining and manufacturing.

"The main boost will likely come from services driven by the anticipated recovery in consumer demand as real household incomes return to growth, inflation remains subdued, and interest rates decline further," Nedbank explains. 

Further upside could stem from government’s plans to accelerate infrastructure spending, as announced in the Medium Term Budget Policy Statement. 

In contrast, government caps on staff numbers would restrict public-sector employment. While employment was forecast to increase, the pace of job creation would still be too slow to absorb new entrants into the labour market and reduce unemployment significantly. Consequently, the unemployment rate would likely remain high, easing only slightly and still leaving a large pool of discouraged workers, Nedbank said.

MORE SENTIMENTS

While the QLFS numbers reveal a welcome, but small, uptick in employed persons, the Free Market Foundation (FMF) has implored the Government of National Unity (GNU) to urgently adopt structural reforms in the South African labour market.

The FMF argued that marginal tweaks of existing policy would also have minimal impact in addressing the enormous challenge of unemployment in South Africa, and thereby weaken the credibility of the GNU at the next election. 

“We need not and, in fact, cannot be satisfied with meagre improvements in unemployment statistics when millions still find it impossible to enter into the labour market and hundreds of thousands are continuously dropping out of the labour force entirely,” sayd FMF policy deputy head Dr Morné Malan.

According to a policy paper recently published by the FMF as part of its Liberty First initiative, South Africa has one of the worst regulatory environments for wage determination in the labour market globally and ranks in the bottom quartile for the general cost of bureaucracy as well as the distortionary impact of regulations on the business environment.

The slight decrease in unemployment evident from the QLFS is most likely ascribable to favourable sentiment surrounding the GNU, but not to any policy reform of note that would be necessary to help the more than 8-million officially unemployed to find work.

Political party Democratic Alliance leader John Steenhuisen says the youth unemployment rate remains unacceptably high, hence the party's strong focus on pro-job measures to be included in the GNU's efforts, including a plan to reduce government debt, no more State-owned entity bailouts, no new taxes, an end to e-tolls in Gauteng, more partnerships with the private sector and more bold structural reforms to address weak service delivery in local government.