Unemployment expected to rise as job creation may be scuppered

By: Business Report

UNEMPLOYMENT in South Africa is expected to continue to rise as the forecast fourth wave of Covid-19 infections towards year-end could scupper any attempts to create new jobs.

Data from Statistics South Africa (StatsSA) yesterday showed that jobs in the formal non-agricultural sector shrank by 86 000 in the second quarter of 2021. This brought the total number of persons employed in the formal non-agricultural sector in South Africa to approximately 9.57 million.

StatsSA’s Quarterly Employment Statistics survey showed that total employment fell by 86 000, or 0.9 percent, quarter-on-quarter, from 9 652 000 in March to 9 566 000 in June.

It said this was primarily due to declines in the community services, manufacturing, construction, electricity, and business services industries. However, there were slight increases in the mining and transport industries while the trade industry reported no quarterly change.

Stats SA director for employment statistics Matlapane Masupye said the community service, which involves a variety of government services, was an outlier with a 65 000 jobs decline.

“The sub-sector within community services which caused that huge drop is one of the provinces whereby assistant teachers’ contracts were not renewed,” Masupye said. “That is why there is a huge drop of 65 000.”

Investec chief economist Annabel Bishop attributed the decline in community service jobs to the government’s aggressive clean-up.

“Government has been cleaning up its payrolls, deleting ghost workers, with a recent report of 36 000 ghost employees in one province alone (North West) according to the premier,” Bishop said.

On a yearly basis, however, formal sector jobs increased by 60 000 in the second quarter of 2021 compared with the same period a year ago. Employment in South Africa still remains below the 2019 pre-Covid levels.

Stats SA said full-time employment decreased by 27 000 quarter-on-quarter, and by 17 000 year-on-year between June 2020 and June 2021.

Part-time employment also decreased by 59 000 between March and June but increased by 77 000 from a year ago.

Masupye said there had been a shift from full-time to part-time, and some of the increase in part-time workers were people who were previously working full-time but now had to rotate on a part-time basis.

The manufacturing industry was the second hardest-hit sector with 14 000 jobs lost in the three months to June.

FNB economist Koketso Mano said job losses in manufacturing were led by the beverages and tobacco industry

following continuous lockdown restrictions. Mano said with the fourth wave expected before year-end, employment in this industry remained vulnerable, given that resurgent waves of the virus add pressure to these markets and delay already protracted business recovery.

“The expected fourth wave of Covid19 infections and the slowing momentum in global growth, induced by the Delta variant, pose a risk to domestic output and employment, especially in industries already affected by prevailing raw material shortages,” Mano said.

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