Holiday season gave SA an employment boost in the fourth quarter

SA’s unemployment rate improved in the fourth quarter, as is usually expected for a quarter that brings a temporary hiring boost thanks to the holiday season.

Unemployment from September to December fell 0.4 of a percentage point to 27.1%, Statistics SA said in its quarterly labour force survey on Tuesday.

Investec economist Kamilla Kaplan said: “Traditionally, seasonal hiring in the services sectors in the last quarter of the year results in an improvement in the number of individuals employed.” 

Despite the trend in recent years, economists polled by Bloomberg expected unemployment to remain unchanged at 27.5%.

The statistics come a day before union federation Cosatu embarks on a nationwide strike to highlight the high unemployment rate and job losses the country is experiencing ahead of the budget speech next week.

“The situation is going to get worse. The upcoming budget speech should be about how we create an economic model that’s sustainable. Right now, we don’t have that,” said Cosatu spokesperson Sizwe Pamla.

“What the president missed at the state of the nation address is to explain what role the government will play to fix the economy. Investment is not enough while there’s clearly a crisis at Eskom. The economy as a whole will feel the pain and will haemorrhage jobs,” he said.

The data showed that the working-age population increased by 149,000 in the fourth quarter of 2018 compared to the previous quarter, while the number of employed increased by 149,000 to 16.5-million. The number of unemployed decreased by 70,000 to 6.1-million.

The employment gains in the fourth quarter, however, are usually temporary and reversed in the following quarter.

The number of employed persons declined in four of the 10 industries. These declines, however, were offset by gains in the following:

• Finance and other business services (109,000)
• Private households (65,000)
• Manufacturing (48,000)
• Mining (31,000)
• Trade (14,000)
• Agriculture (7,000)

Employment gains were recorded in five of the nine provinces, with the largest surge recorded in Gauteng (86,000), followed by the Free State (33,000) and the Western Cape (26,000).

However, the Eastern Cape (15,000) and North West (6,000) recorded the largest employment losses.

Absa senior economist Peter Worthington said: “Employment creation remains weak, reflecting sustained periods of poor investment growth. The long-run trend is probably for SA’s unemployment rate to keep rising gradually.”

President Cyril Ramaphosa has pledged that SA will see growth of as much as 5% a year if policy uncertainty and regulatory frameworks are reviewed. This is the level needed for the unemployment rate to recede, according to economists.

In 2018 at the presidential jobs summit, it was estimated that the economy could create 275,000 jobs a year.

“The outlook for the job market remains cloudy in the short-term due to lacklustre economic activity and difficult operating conditions in the local business environment. However, the long-term prospects might improve as recent government initiatives provide some support,” Nedbank economist Johannes Khosa said.

“It is also hoped that confidence in the private sector will increase after the elections,” he said.

menons@businesslive.co.za