GG Alcock shares his views on South Africa’s unemployment debate

South Africa’s foremost expert on the informal market, GG Alcock, has weighed in on the debate surrounding how the country’s unemployment rate is measured, proposing a solution that includes a new category to measure informal employment.

The debate surrounding South Africa’s unemployment statistics was sparked by Capitec CEO Gerrie Fourie, who argued that the actual unemployment rate is significantly lower than the current data suggests.

The latest Quarterly Labour Force Survey from Stats SA showed that South Africa’s unemployment rate stood at 32.9% for the first quarter of 2025.

However, Fourie argued at a recent Capitec media day that this number should be far lower, as it does not account for South Africans who have businesses in the informal market.

Capitec is targeting this segment, which it calls the ‘emerging market’, through its business banking services.

Fourie explained that these South Africans have businesses that operate similarly to companies in the formal market, but are overlooked by data collectors like Stats SA when compiling the country’s employment data.

He said the country’s unemployment rate is closer to 10% than 33% when including emerging market businesses like spaza shops or backroom renters.

Fourie’s comments sparked a heated debate among various industry stakeholders around how South Africa’s unemployment rate is determined.

Statistician-General Risenga Maluleke has defended Stats SA’s methodology for collecting unemployment data, telling BusinessDay it is “incorrect and misleading to suggest” that the organisation misses those employed in the informal sector.

He said Stats SA measures casual workers using International Labour Organisation guidelines on registration status and sizes of businesses, and to qualify, employees must be unregistered for income tax and work in places that employ fewer than five people.

It also produces reports that measure this sector, including the quarterly Labour Force Survey and the Survey of Employers and the Self-Employed. 

“The informal sector is measured, tracked and reported on consistently, and if anything, the insights these reports provide should guide and enrich policy, not distort it,” Maluleke said.

“We urge industry leaders to engage more deeply with official statistics before questioning their validity. While constructive debate is encouraged, it should be based on solid evidence.”

An alternative solution

South Africa’s foremost expert on the country’s informal market, GG Alcock, recently weighed in on this debate in an interview with Daily Investor.

Alcock has conducted extensive research into South Africa’s informal market and the businesses operating within this segment. He has also advised several large companies on how they can best target the informal market.

For example, he advised Heineken Beverages on its Tavern Transformation Programme in South Africa, through which the company aimed to formalise and elevate township taverns as safe, well-managed social spaces that contribute meaningfully to local economies.

Alcock has estimated that the sector is worth well over R750 billion and consists of thousands of businesses that are far larger and more successful than people realise.

He agreed with Fourie’s argument that South Africa’s unemployment rate would be far lower if all the owners and employees of these businesses were included in the official statistics, estimating that South Africa’s real unemployment rate is closer to 12% to 15%.

However, he said this mismatch is attributable to Stats SA’s approach to unemployment statistics, as the organisation seeks to measure unemployment, rather than employment.

Alcock explained that payslips do not necessarily equate to employment in South Africa’s context, given the large informal sector.

In fact, he said that many business owners in the informal sector do not consider themselves employed because they do not have a payslip or may only earn passive income from sources such as backroom rentals. 

He proposed that, if South Africa truly wants to measure the number of people employed in the country, Stats SA should introduce a new definition for informal employment in its statistics.

He said Stats SA already uses two definitions for measuring unemployment: narrow and broad, with the latter including discouraged work seekers.

Therefore, it would not be far-fetched for the organisation to introduce a separate definition for employment in the informal sector.

Alcock believes the 33% figure in the official unemployment statistics from Stats SA is accurate when measuring formal employment, but is not representative of informal sector employment.

“The point we’re making is not ‘Do they measure enough informal sector employment?’,” he explained. 

“The point is that employment is not necessarily what they’re measuring, because they do not have an expanded definition of what employment could be.”