THE Eastern Cape is facing a full-blown employment emergency, as new data confirms the province is diverging sharply from national labour market trends. The Quarter 4 2025 Labour Force Survey released by Statistics South Africa on 17 February shows South Africa’s official unemployment rate fell slightly by 0.5 percentage points year-on-year to 31.4%.
In stark contrast, the Eastern Cape recorded a staggering 5.9 percentage point increase, the largest deterioration of any province. Seven provinces improved, yet the Eastern Cape went in the opposite direction. The provincial unemployment rate now stands at 42.5%, more than 11 percentage points above the national average.
Denise van Huyssteen, chief executive officer of the Nelson Mandela Bay Business Chamber, warns, “It is highly concerning that the Eastern Cape is moving in the wrong direction. While the national unemployment rate has edged down, our province has recorded the largest year-on-year increase in unemployment in the country. That reflects structural weakness in the provincial economy.”
The youth are suffering disproportionately. National youth unemployment stands at 43.8%, but in the Eastern Cape it is estimated at approximately 54%. Van Huyssteen emphasizes the human and economic toll: “Nearly one in two young people in our province cannot access employment. Youth exclusion at this scale is economically unsustainable and socially destabilising.”
The national picture itself is far from reassuring. Total employment across all sectors grew by a mere 0.12% year-on-year, only 21,000 jobs were added in 2025. Within this context, manufacturing employment collapsed by 7,6% year-on-year, equating to roughly 127,000 jobs lost. This mirrors domestic industrial performance: South Africa’s total manufacturing production volumes decreased by 1,3% in 2025 compared to 2024, while manufacturing sales (in current prices (before adjusting for inflation) declined by -0,6% over the same annual period.
For the Eastern Cape, heavily reliant on export-driven sectors such as automotive manufacturing and other types of manufacturing, these national trends translate into acute local challenges. Businesses in Nelson Mandela Bay are under sustained pressure. “The rising influx of cheap imports into the market, lack of agility in policy changes, electricity unreliability and increasing cost, and inadequate water, sanitation and electricity infrastructure maintenance impacting the competitiveness of manufacturers and are placing manufacturing jobs at risk,” van Huyssteen notes. Staff reductions across multiple companies and weakening supplier networks are compounding the crisis.
The automotive sector remains strategically critical. The South African Automotive Master Plan aims for 60% localisation by 2035, yet current localisation levels have slipped to between 30% and 40%. Van Huyssteen warns, “If localisation continues to regress, we risk hollowing out our supplier base and permanently losing industrial capacity. Incentive frameworks must prioritise genuine domestic value addition and completely knocked-down assembly to secure sustainable manufacturing jobs.”
The Chamber calls for urgent automotive policy changes that should:
- Support the production of low scale NEVS and customer incentives to close the premium price gap,
- Deal with the loopholes which currently make it attractive for semi-knocked down assembly to be undertaken in the country. Alongside this the policy needs to more strongly incentivise completely knocked down (CKD) assembly to ensure that meaningful manufacturing jobs are created;
- Strengthen localisation levels and apply pressure for these targets to be met;
- Incentivise exports to help manufacturers achieve sustainable economies of scale;
- Update the outdated ad valorem taxes which are impeding local CKD manufacturers; and
- Introduce technology incentives to support the modernisation of local manufacturing plants to enhance their global competitiveness.
In order to revive the Eastern Cape’s local economy, Infrastructure reform is urgent: efficient ports and rail systems, expanded private sector participation, and operational accountability are essential to restore export competitiveness. Energy reform is equally critical, requiring transmission expansion, regulatory certainty for private generation, and faster permitting to unlock investment.
Tourism represents low-hanging fruit for job creation, but this potential will remain unrealised without visible improvements in safety and security, as well as consistent cleanliness and urban management standards to rebuild destination confidence and attract both domestic and international visitors.
Van Huyssteen also stresses local governance challenges. “Deteriorating water, sanitation and electricity infrastructure threaten business continuity and investor confidence. Professional administration, financial oversight and consequence management are required. Crime and infrastructure vandalism continue to raise operating costs and disrupt supply chains, requiring stronger enforcement and measurable prosecution outcomes.”
“We need coordinated, urgent and decisive intervention to prevent the province and the metro from falling further behind the national recovery path,” she concludes.
The figures are unequivocal: without structural reforms, enforceable localisation, and accelerated infrastructure recovery, the Eastern Cape will continue to diverge from even the modest national employment recovery, with long-term consequences for growth, social stability, and industrial capacity.
