EDITORIAL: Rewrite the rule book to make a meaningful dent in unemployment

One might imagine that SA has veered so tragically short of the National Development Plan’s (NDP) heady ambitions of a dozen years ago that the government would want to allow the plan to sink quietly into obscurity.

But no. Last week minister in the presidency Mondli Gungubele, who is also chair of the National Planning Commission, said the government planned a consultative process to assess progress in implementing the plan’s targets. It will make some recommendations. What these might be is not clear, especially given that the government has since come up with several more plans to fix the economy.

But this week’s unemployment numbers come as a reminder, yet again, that Gungubele and his colleagues will have to do much more than revive the NDP if they are serious about addressing SA’s social and economic ills. And that’s despite the fact that this week’s numbers were better than expected, showing a welcome lift in employment.

The quarterly labour force figures from Stats SA show the unemployment rate moderated to 32.9% in the third quarter, down from 33.9% in the second quarter and below market expectations of 33.4%. This is still higher than the pre-pandemic rate.

However, there appear to be encouraging signs of progress. The number of people with jobs has increased by 1.4-million since the third quarter of 2021 to reach 15.7-million. The third quarter saw 204,000 jobs created. That’s an increase of 1.3% — despite economic growth that is expected to come in significantly lower than that when Stats SA reports third-quarter GDP figures on December 6. As encouraging is that it was the formal sector that created the jobs during the quarter, whereas employment fell in domestic work and agriculture. Within the formal sector, employment increased in six of the eight industries, including tough sectors such as construction.

But as some economists have pointed out, if the underlying labour force trend was really this good, the economy would be booming, which it clearly is not.

This is where methodology comes in, specifically the sampling method Stats SA employed to compile the labour force survey during the Covid pandemic and subsequently. For obvious reasons, the statistics agency had to suspend face-to-face interviews because of the pandemic. From the second quarter of 2020 it had to rely entirely on telephone surveying. Predictably, this resulted in a decline in response rates. Some people in the sample wouldn’t have had phones at all; others might simply not answer; or they might lose interest halfway and end the call, making their responses invalid. Many would have been harder to persuade over the phone to answer questions than they would be if a Stats SA field worker arrived on their doorstep.

In the event, the response rate plummeted. Statisticians in theory have ways of addressing  such “bias”, but in this case they clearly were not sufficient. By the fourth quarter of 2021 just 44.6% of the sample nationwide actually responded; the number fell as low as 23.8% in Gauteng. As this newspaper pointed out more than once when we started getting rather peculiar unemployment numbers earlier this year, the sample definitely was partly to blame.

Fortunately, Stats SA has been able to resume face-to-face interviewing this year and the response rates have gradually climbed to reach a decent 85.4% in the third quarter (71% in Gauteng), up from 78.7% in the second quarter.

So the question is how much of the gain we have seen in employment over the past year and the past quarter has been a result of the economy and how much a result of the continued improvement in the sample size. Clearly there is a degree of both. That means the trends need to be treated with a degree of caution. No-one can afford to be too complacent about the uptrend in employment or claim it signals a strong economy. But we are clearly on the way to regaining the 2-million jobs which the survey suggested were lost in the depths of the pandemic. That is to be welcomed.

The challenge now is to grow employment much faster. The NDP sought to create 11-million jobs by 2030 and halve the rate of unemployment, which at the time was about 25%. Rewriting a dead plan is not the answer. The government has to rewrite the rule book if it is to address SA’s still huge unemployment rate now.