Unemployment reaches a new high

HR expert says pending legislation may well exacerbate the unemployment landscape.

Statistics South Africa’s Quarterly Labour Force Survey (QLFS) for the fourth quarter of 2021 shows that the number of unemployed persons increased by 278,000 to 7.9 million compared to the third quarter of 2021. In the same period, the number of employed persons increased by 262,000 to 14.5 million.

HR expert John Botha cautions that there is some pending legislation that may well exacerbate the unemployment landscape. He points specifically to the Employment Equity Amendment Act, which has been identified as having a potentially detrimental impact on employment levels for a number of reasons, including the fact that employers with more than 50 employees have to fully comply.

“Further to this,” states John, “we have the pending Employment Services Act amendments that will significantly impact the employment of foreign nationals by imposing strict skills justifications if foreign nationals are to be employed.” The point is that as we have potentially up to 500,000 foreign nationals exiting the South African labour market, it is unlikely that the employers will replace all these positions as it would be an opportunity to re-engineer.

In addition, he notes that the business and employment landscape is increasingly complex with new and amended laws such as the new Covid-19 Code of Practice, the amended Hazardous Biological Agents Act, the COIDA amendments, the pending AARTO Act and the Companies Act Amendments.

He points out that the labour elasticity ratio continues to decrease. In other words, around 12 years ago the labour elasticity ratio was 1:0.7 which meant that for each one percent increase in GDP the employment numbers increased by 0.7 percent. A few years ago this had dropped to around 0.53 percent for developing economies and today would be even less.

John concludes: “Hopefully, the current Labour Law Review process will result in the lightening of regulatory pressures and open up confidence in employing people who need jobs and to earn their livelihoods as well as to grow their self-esteem."

The QLFS notes that the number of discouraged work seekers decreased by 56,000 (1.4 percent) and the number of people who were not economically active for reasons other than discouragement decreased by 341,000 (2.4 percent) between the two quarters.

These changes in the labour market resulted in the official unemployment rate increasing by 0.4
of a percentage point from 34.9 percent in the third quarter of 2021 to 35.3 percent in the fourth quarter of 2021 – the highest since the start of the QLFS in 2008. The unemployment rate according to the expanded definition of unemployment decreased by 0.4 of a percentage point to 46.2 percent in Quarter 4 2021 compared to Quarter 3 2021.

Formal sector employment increased by 143,000 jobs between the third and fourth quarters of last year, while the informal sector shed jobs by 48,000 in the same period. Between the third and fourth quarters of 2021, a net increase in employment of 262 000, was mainly due to an increase recorded in private households (129,000), trade (118,000), and community and social services (73,000). Decreases were observed mainly in manufacturing (85,000), followed by construction (25,000).