South Africa’s unemployment crisis is worse than ever

Over three-quarters of unemployed South Africans have not had a job for an entire year, with the country having the lowest employment-to-population ratio of any G20 nation. 

This stems from a decade and a half of lacklustre economic growth, dwindling investment in infrastructure and growth initiatives, as well as an increasing skills mismatch between graduates and the jobs market. 

If South Africa cannot address this challenge, the country’s long-term economic growth will remain flat, resulting in a worsening financial disaster. 

This is feedback from Coronation’s economics unit, which conducted an analysis of South Africa’s unemployment crisis in its latest quarterly Corospondent. 

It noted that unemployment is the greatest reinforcer of inequality, with faster economic growth and increased employment opportunities the only solutions to tackle South Africa’s sky-high inequality.

South Africa’s unemployment rate is amongst the highest in the world, and is far higher than that of any country of comparable income. 

The latest data shows that South Africa’s official unemployment rate is 32.6%, while the expanded definition puts it at 41.2%. Youth unemployment is worse, with job seekers between 16 and 24 facing an unemployment rate of 62.2%. 

These statistics are well-documented, with South Africa’s unemployment stats seemingly indicating a steady slide towards a country where most of the population does not work. 

Coronation broke down the disastrous growth in South Africa’s unemployment by highlighting three key trends over the period from 1994 to 2025 –

• The number of unemployed people has risen from 3.7 million to 12.6 million, while the population has grown from 40.6 million to 64.1 million.
• The number of working-age people has risen from 20.6 million in 2008 to 29.4 million, while total employment (formal and informal) rose by just 2.2 million.
• The burden of unemployment has risen from 13.5% of the adult population to 20%.

What is most worrying for one of the country’s top asset managers is that long-term unemployment has steadily worsened as well. 

The share of South Africans out of work for more than a year has risen from 63.9% in 2015 to 76.6% as of the second quarter of 2025. 

Compounding this is that long-term unemployment meaningfully reduces the probability of future employment. The employment-to-population ratio – just under 40% – is the lowest in the G20, where the average is closer to 60%.

Worse than it seems

There appears to be no end in sight for South Africa’s unemployment crisis, with the number of people unsuccessfully searching for jobs only growing year-on-year. 

South Africa has a relatively high job coefficient, meaning that economic growth translates strongly into increased employment. Economists typically work on the assumption that 100,000 jobs are created for every percentage point of growth. 

With lacklustre economic growth, South Africa’s economy has not been able to absorb the rapid growth in its workforce, which should have created a demographic dividend for the country. 

Instead, it has created a disaster, with the country’s workforce growing by around 600,000 people a year, while its economy can only absorb 100,000. 

The Reserve Bank’s Quarterly Bulletin, which includes an analysis on unemployment, regularly notes that the largest share of the increase in unemployment comes from new entrants to the labour market who could not find jobs. 

This is primarily made up of young adults coming out of university or school, who cannot find formal employment due to a lack of growth. 

These individuals risk never participating in South Africa’s economy or having a stake in the wealth the country generates. 

The total number of officially unemployed persons in the second quarter of 2025 primarily comprised new entrants to the labour market (43.2%) followed by job losers (25.8%) and persons who last worked five years ago (24.9%), the Reserve Bank said. 

Worryingly, the graduate unemployment rate increased further from 11.7% in the first quarter of 2025 to 12.2% in the second quarter.

While much has been made of South Africa’s potential demographic dividend, it will not materialise unless the country’s youth can be employed.

Allan Gray’s chief investment officer, Duncan Artus, previously warned that this tailwind is at risk of being wasted in the coming decade. 

“We have a lot of young people and we have a lot of young people in the workforce, but we do not have an expanding labour force participation rate,” Artus said. 

“As our chairman, Ian Liddle, says, ‘It does not help if you have got a lot of young people that do not have a job’.”

This creates a problem of its own, with a young population that is at risk of becoming dissatisfied and willing to participate in extreme governance changes.