SA unemployment rate remained exceptionally high at 26.6% in Q2 2016

Stats SA released the Labour Force Survey (LFS) for Q2 2016 today. The LFS is a quarterly household survey specifically designed to measure the dynamics of employment and unemployment in South Africa, including the informal sector as well as small-scale subsistence farmers. The following is a summary of the key trends in the labour market as at Q2 2016 (see charts attached for further information).

In Q2 2016, there were 36.591 million people aged between 15 and 64 years in SA (up 160 000 relative to Q1 2016, and up 636 000 over the past year).

Among these people:
21.179 million were economically active (down 291 000 relative to Q1 2016, but up 292 000 year-on-year)
15.545 million were employed (down 129 000 relative to Q1 2016, and down 112 000 year-on-year) 5.634 million were unemployed (down 90 000 relative to Q1 2016, but up a massive 403 000 year-on-year)

As mentioned above, the number of employed people fell sharply in Q2 2016, declining by 129 000. This follows a massive decline of 343 000 jobs in first quarter of 2016. (Please note that South Africa’s quarterly employment data is not seasonally adjusted). Over the past year the economy had lost a total 112 000 jobs, mostly within the informal sector (which was down -154 000 jobs). In contrast, the formal sector added a surprise 82 000 over the past year, largely in the retail sector as well as the broad finance and business services sector. The increase in formal sector employment was obviously not enough to bring the overall rate of unemployment down meaningfully, which remains exceedingly high at 26.6% in Q2 2016 down fractionally 26.7% in Q1 2016.

In calendar 2014 South Africa created a total of only 143 000 jobs, which was not especially encouraging. In that regard, the labour market unrest in the mining and manufacturing sectors in 2014 was clearly very unhelpful. In 2015 the economy created a substantial 698 000 jobs (mostly in the informal sector), but in the first half of 2016 the economy has shed a total of 473 000 jobs. Since the low point in 2010, South Africa has gained 1.9 million jobs, but this has to be compared against a much larger increase in the labour force. It also needs to be remembered that the gain in employment since 2010 includes the informal sector, which now comprises 16% of total employment. If private household employment and agriculture is added to this, the percentage jumps to almost 30% of total employment.

As mentioned above, the official unemployment rate in South Africa remains exceedingly high of 26.6% in Q2 2016. According to the expanded definition of unemployment, the unemployment rate is a very worrying 36.4%, up slightly from 36.3% in Q1 2016 (this includes discouraged workers). According to the expanded definition, the unemployment rate for the youth (younger than 25) is at an incredible 66.3%. Clearly, the latest labour market data remains discouraging, although there is some comfort in the fact that according to the report the formal sector of the economy is not shedding jobs.

Overall, South Africa’s labour market has lost momentum over the past six months and unemployment rate remains exceedingly high by global standards. Fundamentally, this reflects the lack of economic growth, especially the lack of fixed investment spending by both government and the private sector, as well as the sustained low business confidence. Furthermore, the high rate of unemployment contributes to much of the social tension and anguish experienced

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