Fears concerning the direction of South Africa’s economy resurfaced as the Q2- 19 unemployment rate published during the week edged higher by 1.4%, to 29.0%, the worst performance recorded since the global financial crisis in 2008.
Further analysis showed a distinct disparity in the number of persons who secured jobs compared to individuals who lost employment. Specifically, while those who secured jobs increased 21,000 q/q, those who lost their jobs grew 455,000 q/q, more than doubling jobs created during the period.
Youth unemployment continued to remain the bone of contention, as more than 56.4% of the young workforce were unemployed. In what seemed to be a contradiction to the norm, a lower unemployment rate was seen amongst individuals with little education, as the Agric sector remained the largest employer, requiring mainly labour-intensive production. On a sectoral level, the Mining, Transport, Construction and Banking sectors recorded massive lay-offs, as they struggled to remain profitable, amid a challenging business environment.
This mounts further pressure on President Cyril Rampahosa’s government, an administration already saddled with avoiding another recession. In Q1-19, GDP contracted -3.2% due to weaker consumer demand as well as lower activities in the Agric, Mining and Manufacturing sectors. Also, the government continues to the battle crisis in the power sector, as the ailing state-owned Power utility company, Eskom, reported a monumental loss (R20.7bn or $1.5bn) in its 2018/2019 integrated annual report, despite recent efforts of the government. The above is almost similar to that of Nigeria, Africa’s largest economy, also struggling with high unemployment rate, faltering GDP growth and power sector crisis. Accordingly, to change this narrative, both economies have to find a way to rejig their ailing power sector, boost job creation and create an enabling environment for businesses to thrive. This is critical for faster growth across the region.
Pan African Monitor from United Capital Research