An extensive loss of jobs in the informal sector led to a 0.6% expansion in unemployment to 25.2% during the first quarter of 2014, as the number of unemployed increased 4.9% quarter-on-quarter, the latest Statistics South Africa (Stats SA) Quarterly Labour Force Survey showed.
During the quarter to March, the number of unemployed increased 237 000 as the unemployment rate jumped 1.1 percentage points against a 0.5 percentage-point contraction in the absorption rate.
The Nedbank Economic Unit commented that the unemployment rate was likely to remain high in the short term given weak domestic demand, rising input costs, labour disputes, significant infrastructure constraints and other regulatory issues in some of the key sectors.
“Today’s [Monday’s] figures provide further evidence that local economic performance is still well below potential,” the unit said in a statement to clients ahead of South Africa’s national election on Wednesday.
BNP Paribas Cadiz Securities economist Jeffrey Schultz added that the first-quarter survey continued to point to a domestic labour market struggling to create meaningful employment.
Between the fourth quarter of 2013 and the first quarter of 2014, South Africa shed 122 000 jobs owing to the contraction of 110 000 jobs in the informal sector, particularly as the construction and transport industries recorded cuts of 65 000 and 47 000 jobs respectively.
Informal-sector employment remained virtually unchanged in the mining, utilities and trade industries.
Stats SA reported that both the private households and agricultural industries shed jobs – 14 000 and 5 000 respectively – while a slight uptick in employment in the formal sector added 7 000 jobs.
During the first quarter of the year, the formal sector added 61 000 jobs in the construction industry and 47 000 in the manufacturing industry.
There were employment losses in the formal community and social services, trade and transport industries, while formal-sector employment in the finance and other business services, mining and utilities industries remained virtually unchanged.
The formal sector, gaining 538 000 jobs when compared with the corresponding period the year before, had boosted employment 3.4% year-on-year, expanding employment in South Africa by 496 000 jobs in the first quarter of the year under review.
However, Schultz commented that many of the additional jobs over the past year had been created through the public sector.
“Personal services, which is in essence a proxy for public-sector employment in South Africa, has created over a quarter of the near 500 000 jobs throughout this period,” he said.
Stats SA reported employment increases in eight of the ten industries, with the largest increases observed in trade, community and social services, and finance and other business services, adding 154 000, 132 000 and 130 000 jobs respectively.
The agency also noted that, during the same period, employment losses were highest in the agriculture industry at 55 000 and the manufacturing industry at 52 000.
The number of unemployed people increased 205 000 when compared with the first quarter of 2013 owing to marginal rises of 0.2 of a percentage point and 0.7 of a percentage point in the unemployment rate and absorption rate respectively.
Meanwhile, provincially, quarter-on-quarter employment declined in five of the nine provinces, namely Limpopo, Gauteng, Mpumalanga, Free State and Northern Cape.
During the same period the number of employed people in the Eastern Cape and KwaZulu-Natal remained the same, while employment gains of 1 000 each were made in the Western Cape and North West.
In the Western Cape, narrow unemployment now stood at 20.9% and broad unemployment at 22.6%, said Western Cape Finance, Economic Development and Tourism Minister Alan Winde.
Year-on-year, employment increased in all provinces, except in Free State. The Western Cape and KwaZulu-Natal contributed 146 000 and 103 000 jobs respectively, registering the largest increases during the first quarter of 2014, when compared with the first quarter of last year.
“The Western Cape created the most jobs in South Africa – 146 000. In contrast, Gauteng, which is the largest economy in South Africa, created only 62 000,” Winde commented.