South Africa’s unemployment rate fell for the first time in nearly two years in the fourth quarter of 2021 as manufacturing and mining added jobs to meet Russia’s war-fueled demand for raw materials with Ukraine.
The unemployment rate fell to 34.5% from 35.3% in the last three months of 2021, while unemployment under the expanded definition, which includes people available for work but not looking for work, fell to 45.5% from 46.2% in the fourth quarter.
Despite this improvement, data shows that the Eastern Cape, Mpumalanga, Limpopo and KwaZulu-Natal recorded increased unemployment rates above 50%. In addition, the Northern Cape, the North West, KwaZulu-Natal and Limpopo recorded a difference of more than 15 percentage points between the expanded and official unemployment rates.
The largest employment increases were recorded in Limpopo (81,000), Gauteng (62,000), North West (58,000), Northern Cape (up 57,000) and Free State (54,000). The only province to report a decline in jobs is KwaZulu-Natal (53,000).
The fall in unemployment is also partly due to improved response rates among those with jobs in metropolitan areas after the resumption of face-to-face interviews by the statistics office and increased publicity for the quarterly survey. on unemployment. Response rates climbed to 64.7% from 44.6% in the previous quarter, according to the agency.
“Response rates have not yet reached pre-virus levels and ‘consequently, data users are still advised to use certain estimates with caution,’ said General Statistician Risenga Maluleke.
Thanda Sithole, FNB Senior Economist, said: “The data revealed that the recovery in employment has lagged significantly behind the recovery in GDP, reflecting continued economic uncertainty due to the pandemic and the war in Ukraine. While the employment increase in 1Q22 is encouraging, we are concerned about the current level of employment relative to pre-pandemic levels. »
The lack of job creation alongside the rising cost of living could put additional pressure on the employee and government tax department.
The economist said the current level of private sector fixed investment (at 10.2% of GDP), together with higher production costs and high global uncertainty, imply that the jobs recovery could be prolonged. , with the unemployment rate remaining “sticky” above pre-pandemic levels.
Peter Attard Montalto, head of capital markets research at Intellidex, said data collection problems at Stats SA made the figures “insignificant”, citing discrepancies in formal employment between quarterly population surveys active and employment statistics.
“They used to move at about the same pace, but with a gap,” he said. “Now the quarterly labor force survey has become much more volatile.”
The recovery in the unemployment rate could be short-lived as a record number of power outages forecast for this year, the worst flooding in nearly three decades in the eastern province of KwaZulu-Natal in April, a slowdown in global production , rising interest rates, and soaring fuel and food prices caused by extreme weather conditions and the war in Ukraine will likely weigh on economic growth and job creation.
With further reports from Bloomberg.
Read: Good news for unemployment in South Africa