Picture: THE TIMES
None Picture: THE TIMES

While global unemployment has fallen to its lowest level in almost 40 years, SA is among four countries with an unemployment rate higher than that immediately preceding the 2007/08 global financial crisis.

The worldwide unemployment rate dropped from 8% in 2010 to 5.2% in September 2018, according to a report by investment bank UBS — the lowest level since the 5% unemployment rate recorded in 1980.

The steep decline has been attributed to more flexible working practices, lower wages and rock-bottom interest rates. The decline is also largely due to sharp falls in unemployment in industrialised countries.

However, unemployment in Greece, Italy and Spain is more than 2 percentage points higher than the precrisis level of December 2007, according to the report, and in SA it is 5.4 percentage points higher.

The UBS survey  covered 48 developed and emerging economies that between them account for 84% of global output. The report categorises someone as employed if he or she did any paid work in a given week.

SA’s unemployment is nearing the 30% mark, according to data from Stats SA. The institution’s quarterly employment survey, which is expected on Tuesday, is likely to reflect weak labour market dynamics consistent with persistently weak economic activity, said Investec economist Kamilla Kaplan.

The UBS report notes that SA will struggle to get growth above 2% because of “sluggish investments”.

While data from last week showed SA has emerged from its first recession since the global financial crisis, growth remains weak. National Treasury expects growth of 0.7% this year, while the Reserve Bank expects 0.6%. UBS predicts growth of just 0.5%.

The country has not breached the 2% mark since 2013.

‘Low-base recovery’

But Nedbank senior economist Nicky Weimar warned that these figures simply indicate a recovery from the low base recorded in the first two quarters of the year; they are not indicative of improved momentum in the economy.

“An improvement can only take place in the presence of meaningful job creation, which is unlikely to occur in the absence of meaningful structural reform that encourages investment,” she said.

However, UBS said the economy may benefit from some of the government’s policy movements, including finalisation of the mining charter and withdrawal of the Mineral & Petroleum Resources Development Amendment Bill, alongside spectrum allocation and governance changes at state-owned enterprises. The bank also forecast some recovery in corporate and foreign investments in 2019/20. Should growth improve, SA’s “investment and jobs drive should start to yield results”.

For Citadel chief economist Maarten Ackerman, GDP growth would need to reach 3% “as a bare minimum” to “create inclusive growth and address key issues of poverty and unemployment”.