Entrepreneur and informal economy expert GG Alcock said South Africa’s real unemployment rate is 15% – significantly lower than official figures suggest.
Stats SA recently revealed that South Africa’s official unemployment rate was 32.6% in the second quarter of 2023 – a slight improvement from the first quarter.
The Quarterly Labour Force Survey (QLFS) indicated that the number of employed persons increased by 154,000 to 16.3 million.
The number of people who were not economically active for reasons other than discouragement increased by 93,000 to 13.3 million.
According to the expanded definition, the unemployment rate decreased by 0.3 of a percentage point to 42.1% in Q2 2023.
These numbers suggest that South Africa has one of the worst unemployment problems in the world, especially among the youth.
However, Alcock disputes these numbers, saying it does not accurately reflect what is happening in the informal sector.
He said the country’s real unemployment rate is just above 15%, far lower than the 32.6% that is making headlines.
The reason for the discrepancy is the way Stats SA measures unemployment. It includes a “strict” or “narrow” definition and a broad definition.
- 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 includes people who want to work but are not actively searching for a job as they have lost hope.
Alcock argues that these definitions do not account for the large numbers of income streams that fall outside the definitions.
He argues that unemployment in South Africa should be defined as people who do not have a job or other form of income.
“A person who rents out their backroom for income does not want a job. They are definitely not disillusioned work seekers as suggested,” he said.
He said if you consider all forms of income, excluding social grants, the true unemployment rate is close to 15%.