Unemployment becoming a national disaster

The grim statistics of unemployment in SA are not a secret, nor is the equally grim fact that the figures keep getting worse year after year.

Statistics South Africa’s latest Quarterly Labor Force Survey (QLFS) reiterates this reality with figures showing that there are more than 7.9 million unemployed persons in SA, despite their best efforts to find employment.

Stats SA says the unemployment rate, according to the narrow definition of unemployment, increased to 35.3% at the end of 2021. Stats SA notes that this is a new record since it started doing the survey in 2008 – a sentiment it also expressed at the time of the previous release of the survey for the quarter to September 2021.

A lot of people have given up looking for non-existent jobs, increasing the number of unemployed persons – who would actually like to work – to 10.7 million.

The broader unemployment rate, which includes discouraged work seekers, has increased to 46.2% of potential workers.

It gets even worse. Stats SA notes in its report of the survey conducted during the last quarter of 2021 that a lot of young people are not only discouraged with the labor market, they have even given up on learning the necessary skills to find jobs.

Read: Youth unemployment: Two knock-on effects to expect

“Some young people have been discouraged with the labor market and they are also not building on their skills base through education and training Рthey are not in employment, education or training.

“There were about 10.2 million young people aged 15 to 24 years in quarter four of 2021, of which 32.8% were not in employment, education or training,” according to the report.

That adds another three million odd to the unemployment numbers.

Even these figures do not tell the full story.

One needs to dig into the raw numbers and look at the statistics going back years to fully comprehend the seriousness of the problem.

This is something the Stats SA report fails to do with its focus on quarter-to-quarter statistics and percentage changes.

Raw data

The data supplied as additional information to the report shows that the working age population in SA is growing rapidly.

Defined as persons between the ages of 15 and 65, the working age population has increased from 31.5 million in 2008 (first quarter) to 39.9 million at the end of 2021.

In short, there are 8.5 million more potential workers in SA than in 2008.

A graph of the increase in the working age population shows uninterrupted, steady growth.

Increase in working age population (thousands)

Source: Based on Stats SA data

Stats SA puts the labor force at just below 22.5 million at the end of 2021, after accounting for people who are not available for employments, such as scholars, full-time students and people who choose not to work. The latter includes stay-at-home moms and dads with rich spouses and people who opted for early retirement.

In 2008, the total labor force amounted to 18.8 million. Thus, the figures show an increase of 8.5 million in the working age population, but a lower increase in the size of the labor force of 3.7 million.

The bulk of the difference can be attributed to younger people staying in school and attending universities and tertiary education institutions. Actually, this corrects the rather aged definition of a working age that starts at 15 or 16 years of age.

Increase in labor force (thousands)

Source: Based on Stats SA data

Employment

Employment had been increasing since 2008, but not fast enough to keep pace with a growing population and one that is skewed towards younger people growing up and reaching working age. Then Covid-19 hit.

The initial QLFS (in 2008) reported 14.4 million people in employment that year, with later surveys reporting a steady rise to a peak of 16.4 million in the December 2019 quarter. That’s two million new jobs, and food for a lot of families.

While the growth in employment was too slow then – over the same period the working age population increased by 6.6 million and the labor force by 4.3 million – it crashed when Covid-19 hit.

Within months, SA lost 2.5 million jobs.

The QLFS data shows that the number of employed persons in SA fell to the same level as in 2008.

Number of employed persons (thousands)

Source: Based on Stats SA data

Unemployment rate

No increase in the number of available jobs since 2008, and the steady increase in the working age population and the number of people seeking employment, result in an unbelievable and very worrisome unemployment rate.

Unemployment rate (narrow definition)

Source: Based on Stats SA data

The current unemployment rate of 35.3% can be interpreted in different ways. One is to point out that 35 out of every 100 people eager to work cannot find work. Another is to say that one out of every three adults in SA is staring at a bare food cupboard and does not know what to do about it.

The expanded definition of unemployment indicates that half the people who actually want to work cannot find jobs.

Read: The South African disaster: No businesses for the unemployed

Meanwhile, Stats SA’s recent consumer price index report shows a steep increase in prices of basic foodstuffs.

The latest QLFS contains lots of statistics: by province, age, race, gender, industry, lengths of unemployment and level of education. It is probably all very useful, but the problem of unemployment is getting so big that these statistics should be largely irrelevant.

At this stage, a new job is a new job – lending credibility to calls to deregulate labor markets and doing away with whatever stands in the way of creating jobs.

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