South Africa’s misleading unemployment numbers
Solidarity Research Institute head Connie Mulder said Statistics South Africa manipulates the country’s unemployment statistics by using the narrow definition of the term rather than the broad definition.
“According to all research articles we’ve read, South Africa should be using the broad definition,” said Mulder at a recent Free Market Foundation event.
Statistics SA includes data on discouraged work seekers and the broad definition in its Quarterly Labour Force Survey (QLFS) but uses the narrow definition for the country’s official unemployment rate.
“The moment you have a discrepancy of more than 6% between the two and you have long-term unemployment, you should not be looking at the narrow definition anymore,” said Mulder.
In 1998, Statistics SA officially adopted the “strict” or “narrow” definition of unemployment, used by most countries worldwide and based on guidelines from the International Labour Organization.
This narrow definition considers a person unemployed only if they have taken active steps to look for work or start some form of self-employment.
The broad definition, in comparison, also includes people who want to work but are not actively searching for a job as they have lost hope.
It further includes people who want to work but there are no jobs in the area or people who cannot find work that requires their skills.
The World Economic Forum released its unemployment forecasts by country in February this year, where it projected that South Africa would see the highest jobless rate globally. It estimated a 35.6% unemployment rate for the country in 2023.
This prediction seems likely given the country’s latest unemployment rate – regardless of which definition is used.
Using the narrow definition, Statistics SA reported earlier this year that South Africa’s official unemployment rate in Q4 2022 was 32.7% – the lowest in two years.
However, Mulder said South Africa’s unemployment rate is closer to 43% when using the broad definition.
“We think the government is setting South Africa up to fail with its labour legislation,” he said. “We have an economy that is simply not fulfilling the country’s needs that it should.”
On average, despite actively looking, two-thirds of discouraged work seekers and people who have been unemployed in the long term have not found a job in more than 12 months.
When Statistics SA released the QLFS for Q4 2021 in May 2022, it revealed a record-low response rate, with only 44.6% of the 30,000 households sampled participating.
Professor David Everatt, chairperson of the Statistics Council (the advisory board to Statistics SA), said the organisation’s data collection methods were lacking, and public trust in the government was eroding, contributing to the poor response rate.
Statistics SA must reverse the poor response for the statistics to reflect the data accurately.
However, Statistics SA’s chief director of labour statistics, Malerato Mosiane, said the organisation had made the necessary adjustments for the survey’s bias.
He said the results were still “within the normal margin of error of 5%”, News24 reported.