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3 June 2022
UWC academic warns about dismal situation of the SA labour market, two years after lockdowns
It is a dismal situation for the South African labour market, warns University of the Western Cape (UWC) economist, Professor Derek Yu, as the Statistics South Africa’s 2022 Quarter Labour Force Survey first quarter data has been released on 31 May.

Prof Yu (pictured) noted that South Africa will have a very tough time ahead, just to revert to the pre-COVID labour market level, not to mention to promote youth employment and entrepreneurship more rapidly in the years ahead.  

He said the current overall trends show, upon examining people aged 15-65 years at the time of the survey, that the number of employed decreased by close to 1.5 million between 2020 in the first quarter - just before lockdown started in the last week of March 2020 - and 2022 in the first quarter.

In addition, the first quarter of 2022 was a time when half of the SA adult population was either partially or fully vaccinated, while unemployment increased by 0.79 million. Furthermore, the labour force participation rate (LFPR) dropped by 3.5 percentage points, most likely because some people felt discouraged from seeking work anymore due to the disruptive lockdown restrictions. This happened while the unemployment rate went up by more than 4 percentage points to 34.5%, from 30.1% in the first quarter of 2020. 

“We can be almost 100% certain that the National Development Plan (NDP) labour market goal of dropping the country’s unemployment rate to 6% by the end of 2030 will not be achieved unless a miracle happens and the unemployment rate speedily drops by 3.5 percentage points per annum in the next 8 years. 

“Already experiencing a stagnant real GDP annual growth rate of about 1% per annum in 2014-2019, South Africa suffered an abrupt 6.4% decline in real GDP growth in 2020, before enjoying a growth of “only” 4.9% in 2021. At the time of writing, the International Monetary Fund predicted that South Africa’s real GDP would only increase by a moderate 1.9% in 2022 and 1.4% in 2023. Hence, to expect the country’s unemployment rate to go down to 6% by 2030 is an almost impossible ask.”
 
 

2020 Q1

2021 Q1

Difference

Employment number (1 000s)

16 415 14 933 -1 483

Unemployment number (1 000s)

7 066 7 860 794

Labour force participation rate (%)

60.0 56.5 -3.5

Unemployment rate (%)

30.1 34.5 +4.4
Suffering the greatest decline in employment between 2020Q1 and 2022Q1 were:
  • Africans (accounting for 75% of decline of employment during the 2-year period.
  • The three youngest age cohorts (accounting for nearly 80% of job losses) – further worsening youth unemployment in the country.
  • Those without Matric (representing 80% of employment decrease during the two years). This finding is not surprising, given the structural change in the economy, as the less educated and skilled ones are relatively more likely to lose their jobs during the economic lockdown.
  • Service workers as well as craft and related trades occupation categories – these two categories involve close face-to-face contact with customers, and hence were most likely worst affected by the lockdown restrictions. They represented 22% and 21% of employment decline, respectively.
Prof Yu explains, “When only considering the employees, employment loss was the greatest (accounting for a huge 47% share of total job loss) amongst employees who reported working for a large enterprise with at least 50 employees. This result is not surprising, as it is understandable that the owners of these large enterprises need to cut labour input cost by retrenching some of the employees,“ he noted.

“It is also concerning that 28.4% of job losses happened to employees who reported working in small enterprises with only one to four staff. This result implies some micro-enterprises failed to survive under the difficult circumstances during the lockdowns of the past two years.”

Professor Derek Yu is a Full Professor and Chair: Economics in the Department of Economics at UWC. For more information about studying economics at UWC, click the button below:

UWC Department of Economics