STATS SA released its Quarterly Labour Force Survey on 31 May which showed a slight easing in the unemployment rate. However, chief economist for the Don Consultancy Group, Chifi Mhango, voiced his concerns.
Though the survey showed a marginal decline of 0.8% in unemployment from the last quarter to the first quarter 2022, Mhango said that de-industrialisation, the declining share of the manufacturing sector’s contribution to gross domestic product, high electricity costs, coupled with unreliable electricity supply, rising logistical costs, and an inefficient railway system limited the attractiveness of the economy for new investment.
“South Africa’s unemployment rate ranks one of the highest in the world, and it is concerning for its potential to create social, economic and political instability. Unemployment does not just impact those individuals who are jobless as the level and persistence of the factors of unemployment have wide-ranging impacts across the broader economy,” Mhango said.
The key pillars to reversing the current trend remain in mineral beneficiation to expand the industrial landscape, supported by an expansion of the market footprint through exports. Support for SMME development, speedy implementation of local procurement policies across the public and private sectors, public infrastructure programmes, and restoration of public confidence in state owned entities were essential if the unemployment crisis was to be solved.
“An unemployment rate of 34.5 percent is a matter of national concern and needs to be addressed urgently. South Africa needs to improve its business environment, encourage an entrepreneurial culture as well as access to business finance,” Mhango said.
“Although government has various policies to try and create a conducive environment to drive investment and job creation, the released QLFS data clearly shows that the dream of drastically reducing the unemployment is yet to be realised,” Mhango said.
