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(Getty)
- South Africa’s official unemployment rate fell from 30% to 23% in the second quarter of 2020.
- This is mainly due to how being “unemployed” is defined.
- Those who were unable to find work during the confinement were not counted as unemployed.
- Furthermore, the sample size for the employment survey was much smaller than usual.
- For more articles, go to www.businessinsider.co.za.
Statistics SA released the Quarterly Workforce Survey for the second quarter, which covers the highest point of the strict local coronavirus lockdown, on Tuesday. It shows a sharp drop in the unemployment rate in South Africa.
ESTADÍSTICAS SA
Of course, this is not correct.
The official unemployment figure in the headlines fell from 30.1% to 23.3%, which is clearly insane, says Peter Attard Montalto, head of Capital Markets Research at Intellidex..
Here’s how to understand the latest data on unemployment:
Define ‘unemployed’
Statistics SA reported that the number of unemployed fell by 2.8 million, to 4.3 million, in the second quarter.
This is mainly due to their official definition of unemployed.
To be classified as unemployed, you must be out of work and looking for work, says Sisamkele Kobus, an analyst at fund manager Ninety One.
During the confinement, people could not go out to look for work and therefore, by definition, they were not strictly “unemployed”.
When asked why they did not seek work, most people cited the national lockdown and the coronavirus pandemic as the main reason for not actively seeking work, Statistics SA confirmed.
You also can’t be unemployed, according to the official definition of the term, if you are discouraged and have given up on finding a job.
Additionally, people who lost their jobs during the quarter were grouped into the “not economically active” category, which is not part of the workforce, Kobus says.
“People laid off from jobs who want jobs are clearly not out of the workforce and therefore their [Stats SA’s] The release is deceptive, says Montalto.
There was a massive increase of 5.6 million people who were not officially unemployed, but who were “economically inactive” for reasons other than discouraged job search.
(Statistics SA)
If people who lost their jobs were added back to the expanded definition of unemployed (which would also include people who stopped looking for work or could not look for work during the closing), then the unemployment rate for SA would be 52, 7%. – a much more fair reflection of what is happening, says Montalto.
According to Stats SA’s own expanded definition of being unemployed, which includes those who do not dare to look for work, South Africa’s unemployment rate is 42%.
(Statistics SA)
The number of people employed
Another clue to the real state of the labor market is the number of people who actually had a job in the second quarter.
“When you look at the number of people employed, the outlook is dire,” says Kobus.
In the second quarter there were 2.2 million fewer people employed, a decline from 16.4 million people employed to 14.2 million. Estimates had put that number between 1.2 million and 1.8 million
(Statistics SA)
According to the data, 25% fewer domestic workers were employed than a year earlier, 16% fewer technicians and 12% fewer plant and machine operators. (But 25% more skilled farm workers had jobs.)
A smaller group surveyed
Every quarter, representatives of Stats SA visit 33,000 homes to ask them about their employment situation. South Africa’s official unemployment number is based on how many people are unemployed in this group, which has been carefully selected to reflect the general population.
“I think that, in normal times, unemployment figures are reasonably accurate,” says Josh Budlender, a researcher at the SA Institute for Socio-Economic Rights, who is currently doing his Ph.D. in economics at the University of Massachusetts. “A survey of 33,000 households is actually quite large, and statistically speaking it is certainly a large enough sample to make inferences about the broader SA population if sampled correctly, which we think Stats SA does.”
But in the last quarter, fewer households were interviewed for the survey. Due to the blocking measures, the representatives of Stats SA were unable to visit the homes. They tried calling the households they surveyed previously, but were unable to reach all of them.
“As such, it is difficult to compare this set of results with the previous set, since the sample set is not the same and the last set is not a complete sample,” says Sanisha Packirisamy, economist at Momentum Investments.
Consequently, Statistics SA issued the latest unemployment figure with a strong qualification.
“Given the change in the survey collection mode and the fact that [second quarter] estimates are not based on a complete sample, comparisons with previous quarters should be made with caution. “
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