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South Africa’s unemployment has risen to 6.5 million, according to data from Statistics South Africa (Stats SA).
Stats SA released the quarterly labor force survey for the third quarter of the year on Thursday, which shows that the official unemployment rate rose to a record 30.8%.
“Unemployment increased substantially by 2.2 million to 6.5 million compared to the second quarter of 2020, resulting in a 2.8 million (15.1%) increase in the number of people in the workforce, “said Stats SA.
The expanded unemployment rate increased 1.1 percentage points to 43.1% in the third quarter.
Economists had anticipated an increase in unemployment figures.
During the quarter, more businesses were allowed to operate as the economy slowly reopened, which meant more people could re-enter the workforce and look for work. Stats SA noted that labor force participation was higher in the third quarter than in the second quarter.
According to the data, the largest increases in employment were observed in the formal sector (up to 242,000), followed by the informal sector (up to 176,000), private households (up to 116,000) and the agricultural sector (up to 9,000).
“Compared to a year ago, total employment decreased by 1.7 million,” Stats SA said.
Stats SA was criticized after the publication of the second quarter results, as the official rate registered an improvement of 23.3% compared to the 30.1% previously reported. During the quarter, lockdown restrictions were tougher, and economic activity was reduced only to essential services. According to Stats SA, the sample used for the second quarter data was smaller than usual. Due to the lockdown, people were unable to look for work and were not categorized as active in the labor force, which also affected the calculation of the official unemployment rate. Economists had warned that the expanded unemployment rate of 42% was more realistic.
Schepper’s Office of Economic Research senior economist Lisette IJssel said the third-quarter unemployment statistics would be one of the first indicators of “permanent damage” to the economy and labor market due to the lockdown, Fin24 previously reported.
It could still take several years for employment to return to pre-shutdown levels, Schepper’s IJssel said. Economists expect unemployment to worsen in the coming quarters. Economist Mike Schüssler forecasts that unemployment will peak at around 40% in the first quarter of next year.
