South African unemployment worse than it seems
South Africa’s unemployment problem is deeper than it seems, with election-related outliers boosting the latest statistics and masking the size of the country’s challenge.
The scale of the problem was revealed in the Reserve Bank’s most recent Quarterly Bulletin, released late last year.
It showed that the improvement in employment statistics seen in mid-2024 was mainly driven by the temporary election-related jobs created in the public sector.
As the Independent Electoral Commission geared up to facilitate the elections towards the end of May, it temporarily employed thousands of South Africans.
The bank said a large portion of the increase of 109,400 jobs in the public sector was related to the election and not any improvement in the economic climate.
When excluding election-related employment, public sector employment increased by only 13,400 during the quarter.
Employment increased across all tiers of the public sector, except for state-owned companies in the public transport, storage and communication services sector.
The most notable increase was recorded in other public sector enterprises, reflecting the large number of election-related employment opportunities created over this period, the Reserve Bank said.
Worryingly, the private sector, which employs more than three times the people of the public sector, continued to shed jobs due to low economic growth and logistics constraints.
The Reserve Bank said it has also become increasingly clear that significant labour market skills mismatches exist in South Africa, with many companies being unable to fill vacant positions.
It expects employment prospects are likely to remain uncertain as the South African economy is expected to grow by only 1.1% in 2024.
This is despite the improved post-election sentiment, a sustained period of stable electricity supply, the appreciation in the exchange value of the rand and lower consumer price inflation.
Particularly worrying for South Africa is that much of its employment crisis has been masked by a strong performance from the agricultural sector in recent years.
This sector is vital for the country’s employment dynamics as it can rapidly absorb a large number of unskilled workers.
It has performed remarkably well in recent years, offsetting declines in manufacturing and mining.
However, just as quickly as this sector can absorb workers, it can also lose them, making it an unreliable source of employment for an economy.
This is why the Reserve Bank and other financial institutions look at formal, non-agricultural employment data as a more reliable metric of the country’s economic performance.
This data does not paint a pretty picture. Formal employment is still well below pre-pandemic levels, emblematic of the country’s economic struggles.

Another problem is the fact that private-sector employment has not recovered since it plummeted during the Covid-19 pandemic.
The lack of recovery has also been broad-based, with only the trade, catering, and accommodation services sector getting near pre-pandemic levels.
Despite increased business confidence among retailers, which are some of the largest private employers in South Africa, the sector’s employment remains 4.4% below pre-pandemic levels.
The Reserve Bank said that only a sustained increase in confidence above the neutral 50-point level of business confidence, together with improved consumer demand, is needed to stimulate meaningful employment gains.
By contrast, employment decreased in the remaining private services sectors in the second quarter of 2024.
The finance, insurance, real estate and business services sector was particularly hard hit, losing 13,600 jobs in three months.
In addition, the private transport, storage and communication services sector shed 1,800 jobs in the same period.
The labour force participation rate remained broadly unchanged at 60.6% in the second quarter of 2024. However, the labour absorption rate – the percentage of the working-age population (15 to 64 years) who are employed – decreased to 40.3%.
This effectively means that the South African economy is unable to absorb a growing number of people looking for work. As the working-age population increases, employment has declined.
The mining sector, in particular, has been a source of widespread job cuts and restructuring as these companies have come under immense pressure from lower commodity prices and rising costs.
Manufacturing, another historic source of employment for relatively low-skilled South Africans, has also come under pressure in recent years.
However, the Reserve Bank said this may change as confidence within the sector continues to rise and load-shedding appears to have ended.
The sector still plays a pivotal role in South African employment, with 470,600 people working in the industry.
The graph below, courtesy of the Reserve Bank, shows how private-sector employment has failed to rebound to pre-pandemic levels.

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