Police crackdowns on informal traders added to unemployment, says FNB
- South Africa's unemployment rate remained at 29.1% in the last quarter of 2019 - the highest number on record.
- And for the first time on record, South Africa didn't see an employment bump over the festive season.
- Informal unemployment shrank, due in part to police crackdowns on illicit trade, says a senior FNB economist.
- For more, go to Business Insider SA's home page.
Police crackdowns on illicit trade in South Africa’s major cities in the second half of 2019, along with civil riots, has contributed to a fall in informal employment, said FNB senior economist Siphamandla Mkhwanazi on Tuesday.
Earlier in the day, Statistics South Africa released its Quarterly Labour Force Survey for the last three months of 2019, which showed that the unemployment rate remained unchanged at 29.1%– the highest number since the start of the QLFS survey in 2008.
Mkhwanazi said it was disappointing to see that the weakness in employment growth is now spilling over to the (non-agricultural) informal sector, which employed almost 3% fewer people than a year before. For the past three years, informal employment growth outpaced job growth in the formal sector. “This helped keep employment above water.”
In Johannesburg, hundreds of people were arrested as raids on counterfeit goods sold by hawkers turned violent in August last year. In the following month, at least seven people were killed in riots in the same city.
Mkhwanazi said it was also disconcerting that the traditional increase in temporary employment during December did not materialise.
Instead, the number of employed people declined by 108,000 in the fourth quarter of 2019 compared to the same period in the previous year,” he added.
“This means that the customary uplift in employment during the festive season did not materialise in 2019 - in fact, there was a decline in employment in the trade sector.”
According to Statistics SA, this was the first time on record that the unemployment rate did not decrease in the fourth quarter.
The largest job cuts were recorded in the utilities sector (-10.5% from the previous year), construction (-8.8% y/y) and manufacturing (-2.6% y/y).
“Notably, job losses in the finance sector are starting to show in the numbers, with employment in the sector declining by 1.7% y/y for the second consecutive quarter,” said Mkhwanazi.
Last year, Standard Bank announced that it was closing more than 100 branches, with some 1,800 workers affected. Nedbank and Absa have also cut jobs.
The only sectors which saw growth in employment numbers were transport/trade (4.7% y/y), government (4.6% y/y) and agricultural (4.2% y/y).
Agricultural economist Wandile Sihlobo is generally optimistic about the near-term agricultural jobs outlook. “The potential improvement in summer crop production, following an 8% expansion in area plantings, coupled with the expected increase in wine grape production and other fruits could lead to an increase in employment, albeit some of this is likely to be seasonal.”
But Chery-Jane Kujenga, Interim Chief Executive Officer of the recruitment group Adcorp Holdings expects that the job losses overall will worsen this year.
“Unfortunately this year has started with mass retrenchments. The economy also continues to struggle and it seems unlikely there will be any improvements in the near future so we anticipate the unemployment rate will climb further this year.”
Telkom, Massmart (Makro, Game and Dion Wired), Glencore and Aspen are some of the companies that have announced job losses.
Kujenga noted that even though the economy was officially not in recession “the hiring conditions are the same as if we were already in recession”.
The Statistics SA numbers show that of the 20.4 million South Africans aged 15-34 years, 40.1% were not in employment, education or training (NEET) in the fourth quarter – a decrease of 0.3 of a percentage point compared to the third quarter.
Gauteng and the Western Cape recorded the lowest NEET rate among young people:
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