Statistician-General Riseka Maluleke yesterday exposed contradictions in the economy’s inability to create jobs, saying that unemployment had shrunk on Covid-19 but the number of people seeking jobs had increased.
Maluleke told the nation that although the official number of employed people fell significantly in the three months to June as the lockdown restrictions prevented job-seekers from looking for work, the economy put more people out of work.
He said the statistics agency’s quarterly labour force survey showed that 2.2million more people lost their jobs in the second quarter, decreasing the overall number of employed people to 14.1m.
Maluleke said while unemployment fell to 2011 levels after the lockdown restrictions prevented millions from searching for employment, more people were out of jobs. He said the contrast of a greater increase in inactivity than in unemployment was not unique to South Africa.
“This phenomenon we are seeing in South Africa is prevailing all over the world with declining unemployment rates as well as declining numbers of those that are employed,” Maluleke said. “We are not the only country in the world that uses this definition. It comes from the International Labour Organisation. It’s called the narrow definition of explaining unemployment.”
Statistics South Africa (StatsSA) said the official unemployment rate experienced a significant 6.8percent decrease from 30.2percent to 23.3percent in the second quarter. It said the period under review accounted for most of the hard lockdown months and the worst impact of the pandemic, which halted most economic activities.
StatsSA said the construction industry was the hardest hit percentage wise, with a 20percent year-on-year decline in employment to 297000 jobs.
Maluleke said 5.2million people fell into the economically inactive category, hindered from actively looking for employment by the lockdown restrictions.
He said 5million people left the labour force in the second quarter.
Maluleke said this unprecedented change was the largest quarter one to quarter two decline in 11 years since the survey began in 2008.
Anchor Capital’s Peter Little said the apparent drop in unemployment flattered the reality that more people were left out of the economic mainstream during the quarter.
“The drop in the unemployment rate was purely a function of a decline in who StatsSA considers to constitute the labour force,” Little said.
“The data reflect a huge jump in the not economically active category, from 12.5million to 18million, and it is that jump which shrunk the labour force and made the ratio of unemployed people relative to the labour force drop.” StatsSA said the strict lockdown period between April and June saw the economy falling by 51percent in the second quarter of the year as activity virtually ground to a halt.
FNB senior economist Siphamandla Mkhwanazi said the job losses would not end anytime soon.
“The fall in unemployment is not a true reflection of the current labour market conditions, but rather a technical issue in the definition of official unemployment,” Mkhwanazi said.
“We expect a continued weakening in labour market conditions, possibly extending into 2021.”
The unemployment rate according to the expanded definition of unemployment increased by 2.3percentage points to 42percent in the second quarter.
PricewaterhouseCoopers’ (PwC’s) chief economist, Lullu Krugel, said some of the 2.2million jobs lost in the second quarter will be recovered during the second half of this year.
“However, PwC still expects a net loss of 1.5million jobs by year-end,” Krugel said. “If unsuccessful in addressing unemployment issues, PwC’s Adapt framework warns that economies like South Africa may face increasing social unrest.”