South Africa

Positive turn for unemployment in South Africa

South Africa’s unemployment rate fell for the first time in a year, driven by job increases in the community and social services and construction sectors, as business confidence improves and economic growth shows signs of recovery.

The unemployment rate dropped to 32.1% in the three months through September, compared with 33.5% in the previous quarter, according to data released by Statistics South Africa in the capital, Pretoria, on Tuesday.

The median estimate of three economists surveyed by Bloomberg was for the jobless rate to drop to 32.8%.

The improvement will be welcomed by South Africa’s new so-called government of national unity. It has made reducing unemployment and faster economic growth its top priority, with President Cyril Ramaphosa pledging heavy investment to upgrade the country’s frayed infrastructure.

The construction sector added 176,000 new jobs in the quarter.

“The drop in the jobless rate was in large part due to a surge in jobs created, a big share of them in the construction sector — in keeping with the GNU’s pledge to turn South Africa into a building site,” said Bloomberg Economics’ Africa economist Yvonne Mhango.

Business confidence has improved since the formation of the coalition, which allies the African National Congress with the centrist Democratic Alliance and a number of other smaller parties.

It was formed after May 29 elections in which the ANC lost its national majority for the first time since the end of White minority rule in 1994.

The number of employed people increased by 294,000 to 16.9 million in the three months through September, Statistics South Africa said.

The expanded definition of the unemployment rate, which includes people who were available for work but not looking for a job, also fell to 41.9%, from 42.6% in the June quarter.

The increase in employment will also support the government’s efforts to stabilize debt, grow the nation’s tax base and reduce the number of people dependent on the state.

The Treasury, which has committed R3.4 billion to job-creation initiatives in the 2024-25 fiscal year, estimates that over the next three years, 30.6% of the population will receive some form of social grant. That excludes a stipend for the unemployed introduced during the Covid-19 pandemic.

The job additions were created against an improved economic background, in large part due to the constant electricity supply.

State-owned power utility Eskom hasn’t implemented rolling blackouts since March, following years in which they weighed on economic activity.

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