Ramaphosa must account for unchanged high unemployment rate – economists

President Cyril Ramaphosa has a lot of explaining to do when he delivers his state of the nation address on Thursday.

Although South Africa’s unemployment rate remained unchanged at 29.1% in the final quarter of last year, the National Development Plan aimed for an unemployment rate of 14% by this year.

There were 6.726 million people without jobs in the three months to December 31, from 6.734 million people in the previous quarter, Statistics SA said its quarterly labour force survey.

Under the expanded definition of unemployment, which includes people who have stopped looking for work, unemployment stood at 38.7%, slightly up from 38.5% in the previous quarter.

Based on this, South Africa has the fourth-highest unemployment rate out of 182 countries tracked by Trading Economics – after Namibia, Bosnia and Herzegovina and Angola.

“The NDP aimed for an unemployment rate of 14% by this year. This gives Ramaphosa a lot to answer for when he delivers his state of the nation address on Thursday,” said PwC strategy and economists Lullu Krugel and Christie Viljoen.

Of concern for Krugel and Viljoen was the 159 000 jobs lost in the wholesale and retail trade sector.

“The fourth quarter usually sees an increase in retail employment – and an accompanied decline in the unemployment rate – as retailers increase staff for the November [Black Friday] and December [holiday] shipping periods,” they noted.

“The decline in retail employment reflects weak confidence among retailers and consumer confidence back in negative territory. Another concern is the 77 000 jobs lost in the informal sector – these are often jobs on the margin of the economy, affecting the poorest of the poor.”

The latest Stats SA employment data is released nearly 13 months after government’s Jobs Summit and 17 months after the release of Ramaphosa’s economic stimulus and recovery plan.

“Clearly, neither endeavour has had a real positive impact on the country’s employment creation. The latest unemployment rate does not reflect the ‘steady progress in addressing some of the main impediments to job creation’ that the president referred to in December last year after a meeting of the Presidential Working Committee on Jobs,” Krugel and Viljoen said.

Last year’s World Economic Forum Global Competitiveness Report once again reflected a key challenge for South Africa’s unemployment problem: the lack of sufficient and appropriate skills among its labour force.

The report ranked the skills of the South African workforce as 101 out of 141 countries.

The skill-set of graduates ranked 102nd while the digital skills among the active population ranked a dismal 126th. Due to these issues, the ease of finding skilled employees also ranked poorly at 98th.

The PwC economists called on Ramaphosa to update the nation this week on progress regarding his state of the nation address last year in which he pledged for a comprehensive plan – driven and coordinated by the presidency – to create 2 million new jobs for young people over the next decade.

“It is indeed a crisis requiring solutions,” they said. – additional reporting by Reuters

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