South African unemployment hits 11-year high


PRETORIA (Reuters) – South Africa’s unemployment rate jumped to its highest since the global financial crisis more than a decade ago, data showed on Tuesday, piling pressure on a shrinking economy and President Cyril Ramaphosa’s pledge to deliver a turnaround.

Workers are seen at a construction site in Sandton outside Johannesburg, South Africa June 20,2016. REUTERS/Siphiwe Sibeko/File Photo

The increase in joblessness was preceded by a sharp rise in jobless claims from the Unemployment Insurance Fund (UIF) between 2018 and 2019. Claims rose 21% to 9.2 billion rand, the labour department said.

“The increased payment in the unemployment benefit could be attributed to retrenchments that have plagued the country due to subdued economic growth,” the Department of Unemployment and Labour said.

In February, National Treasury said unemployment payments would increase to nearly 16 billion rand by 2021, and while that would be matched by growth in the fund’s assets, it would be offset by liabilities of other social security funds like the Road Accident Fund, which is 242 billion rand in the red.


Job cuts across a host of sectors are set continue into the next few years. On Tuesday, state power firm Eskom reported a more than 20 billion rand annual loss, making mooted staff cuts in the region of 7,000 almost inevitable.

At a 2018 job summit that formed the centrepiece of his recovery pledge, Ramaphosa promised to create 100,000 new jobs, but analysts doubt he can achieve the target.

Second quarter unemployment rose to 29% from 27.6% in the first quarter, driven by job cuts in private households, transport and mining, data from Statistics South Africa showed.

It was the highest jobless rate since 2008 when the quarterly survey started, statistician general Risenga Maluleke said, adding it would be difficult to create jobs in a shrinking economy.

There were 6.7 million people without jobs in the three months to the end of June, compared with 6.2 million people in the prior quarter, Statistics South Africa said its quarterly labour force survey.

“The labour force is currently growing by around 101,000 people per quarter, where as the economy is creating on average 53,000 jobs per quarter,” chief executive of Adcorp Innocent Dutiro said. “This means the economy is generally absorbing only one in two potential workers.”


Last week two ratings firms warned of the impact on an already dire economic growth outlook of the 59 billion rand ($4.15 billion) bailout for state power firm Eskom, sending the rand tumbling and raising the price of debt.

That added to pressure coming from Ramaphosa’s political battles with factions inside the ruling African National Congress (ANC), further dimming growth prospects in the continent’s most industrialised economy.

The unemployment data also showed about 8.2 million, or 40.3%, out of 20.4 million people aged 15-34 years, were not in employment, education or training, underlining the social and political dangers posed by the high jobless rate.

Labour unions which supported Ramaphosa’s campaign have threatened to embark on strikes over retrenchments.

“The National Treasury and SARB’s superstitious fixation with narrow bands of inflation-targeting and budget-deficit are at the expense of industrial expansion and job creation,” said spokesman of trade union federation Cosatu Sizwe Pamla.

The ruling ANC on Tuesday gave tentative support of the Reserve Bank’s mandate, but said it wanted it nationalised, a move the bank’s governor has warned was scaring off investors.

“The current environment is not helping where you have government pouring billions into bailing out state firms. And when companies see the political infighting that’s going on it’s not encouraging,” said Wayne McCurrie of First National Bank.

“What companies and investors respond to is demand in the economy and unfortunately there is none of that, and consumers aren’t spending because many don’t have jobs, so it’s hard to see where a recovery will come from,” McCurrie said.

Reporting by Mfuneko Toyana; Editing by Janet Lawrence

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