In South Africa, even skilled workers seek street work



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South Africa is forecast to set an unwanted world record this week when its statistics agency is forecast to report that unemployment rose to a record 34.8% in the second quarter, which would be the highest of 83 countries tracked by Bloomberg.

Ayanda Mbatha was one of the unlucky ones who joined the ranks of the unemployed in the period. Dressed in a shirt and tie, the 26-year-old mechanical engineering graduate spent four weeks at the intersections of Johannesburg’s wealthy suburbs of Hyde Park and Sandton advertising his skills on a sign around his neck and with copies of his CV in hand. . in the hope that a passing motorist can help with a job offer.

“Sometimes I thought ‘I don’t have a job, they fired me, what am I going to do? There is no salary, ‘”she said in an interview.

Mbatha is one of roughly 3 million people who lost their jobs as restrictions to curb the coronavirus pandemic shut down all less essential services in Africa’s most industrialized economy. Most businesses were closed for five weeks starting March 27, and some were downsized or permanently closed due to the closure. A study of a group of 30 academics and researchers shows that 1.5 million more people were suspended.

What the Bloomberg economist says

Much of the second-quarter job losses should reverse once the economy opens, but the question is how much and when? We believe the recovery will be prolonged given the weak growth prospects. We also expect a slight rebound in the structural unemployment rate, as some of those who were laid off during the crisis remain permanently unemployed. –Boingotlo Gasealahwe, African economist

South Africa faced an unemployment crisis even before the virus. The unemployment rate has been above 20% for at least two decades, despite the economy expanding 5% or more a year in the early 2000s. Analysts cite an educational system that does not provide the Adequate skills and strict labor laws that make hiring and firing burdensome and apartheid-era spatial planning that makes it difficult for job seekers to enter and remain in the formal workforce as part of the problem.

President Cyril Ramaphosa pledged to push economic growth to 5% by 2023 and prioritize employment when he was campaigning to become leader of the ruling party three years ago. Since he became president of the country, he organized an employment summit that aimed to create 275,000 annual jobs and launched a program to create job opportunities for young people.

Results have been mixed, and the lack of urgency in implementing policies to drive growth and convince companies to invest is hampering progress.

“Much of the mismatch we see between government solutions and the problems we have is because the government is making policies for an economy that does not exist,” said Sithembile Mbete, senior professor of political studies at the University of Pretoria.

The crisis may get worse.

Just keeping the employment rate unchanged would require the economy, stuck in its longest recession in 28 years, to grow between 1.5% and 2.25% annually to match an annual increase of 1.5% in the working-age population, according to Elna Moolman, an economist at Standard Bank Group. Population estimates show that there are 59.6 million people in South Africa, of which almost 30% will enter the labor market in the next decade.

“Under the scenarios for the post-2020 economic recovery, it could be three to seven years before employment returns to 2019 levels,” said Christie Viljoen, an economist at PwC based in Cape Town.

For the Mbatha expert, hitting the pavement paid off.

A photo of him at the intersection was widely shared and reached a director of an automation company looking for a project engineer. He started working in September, after being unemployed for four months, and is now using the network of professional recruiters and trainers who reached out to help guide others.

© 2020 Bloomberg

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