SA unemployment rate rose sharply in Q1 2016 to 26.7%

Stats SA released the Labour Force Survey (LFS) for Q1 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 Q1 2016 (see charts attached for further information).

In Q1 2016, there were 36.431 million people aged between 15 and 64 years in SA (up 159 000 relative to Q4 2015, and up 632 000 over the past year).

Among these people:
21.377 million were economically active (up 166 000 relative to Q4 2015, and up 383 000 year-on-year)
15.663 million were employed (down 355 000 relative to Q4 2015, but up 204 000 year-on-year)
5.714 million were unemployed (up a massive 521 000 relative to Q4 2015, and up 179 000 year-on-year)

As mentioned above, the number of employed people fell sharply in Q1 2016, declining by 355 000. This follows an increase of 190 000 jobs in final quarter of 2015. (Please note that South Africa’s quarterly employment data is not seasonally adjusted). Over the past year the economy had added a total 204 000 jobs in both the formal as well as the informal sectors of the economy. This was, however, not enough to stop the unemployment rate rising from 26.4% in Q1 2015 to 26.7% in Q1 2016. The latest employment reports (LFS) indicates that most of the jobs created over the past year were in the government/community/social services sector (225 000) as well as in the retail/accommodation sector (115 000). In contrast, the manufacturing sector shed 141 000 jobs.

In calendar 2014, South Africa created a total 143 000 jobs, which is not especially encouraging given the existing high rate of unemployment, coupled with the expansion in the labour force. 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). Since the low point in 2010, South Africa has gained a total of just over 2 million jobs. (It needs to be remembered that this total includes informal sector employment, which now comprises 16% of total employment. If private household employment and agriculture is added to this, the percentage jumps to 30% of total employment.

As mentioned above, the official unemployment rate in South Africa rose to a high of 26.7% in Q1 2016, up from 24.5% in Q4 2015. This compares with a previous high of 26.4% in Q1 2015. According to the expanded definition, the unemployment rate is 36.3%, up from 33.8% in Q4 2015 and 36.1% in Q1 2015 (this includes discouraged workers). According to the expanded definition, the unemployment rate for the youth (younger than 25) is at an incredible 67.3%. 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 and that informal sector employment is helping to offset some of the job losses in other sectors of the economy.

Overall, despite the job gains over the past year, South Africa’s unemployment rate remains exceedingly high by global standards. Furthermore, the high rate of unemployment contributes to much of the social tension and anguish experienced in South Africa on a daily basis, especially among the youth. Increasing employed in South Africa has to be the number one economic/political/social objective.

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