Statistics South Africa recently announced that South Africa’s unemployment rate has hit an all-time high of 34.4% which is upon the previous quarter of 32.6%. Unemployment is defined by people who are actively searching for a job and are able, available and willing to work at the going wage but cannot find work. Unfortunately, the government has warned that they can expect these rates to continue to climb as South Africa clamps down on Covid again and is currently the worst-hit country in Africa in terms of case numbers.
However, these unemployment issues are not new for South Africa and unfortunately, the country has a long history with high unemployment rates largely stemming from 2 main sources:
The South African education system is underperforming and underequipped having had no large investments into the industry in the last few years and as a result, 26% of the population between 18-65 have not received secondary education. This creates a large issue within the SA labour market as there is an extreme surplus of unskilled workers and a shortage of skilled workers because this SA unemployment level has been rising consistently since Nelson Mandela’s release in 1994 to the staggering 34.4% we see today. The problem of education has only been exacerbated by Covid-19 as schools in South Africa, particularly rural schools, did not have access to online learning throughout the various stages of lockdown and as a result, many school children missed out on nearly a full year of schooling. Whilst this is an issue it may not have greatly contributed to the rise in unemployment currently but will sorely be felt as these children move into the labour market.
Perhaps what has added most to the growing number of unemployed, currently at 7.83m out of a population of 60m, is the recession South Africa is experiencing as well as being downgraded to junk status in March of 2020. Junk status is the grade assigned to South African assets and particularly bonds and has fallen as low as it can fall – as a result, this has discouraged investment into South Africa as investors worry about repayments. This of course has stopped a large flow of cash into the economy which has meant that the government was not able to support the labour market during Covid-19 especially when compared with the UK’s ‘luxurious’ furlough scheme.
However, the match that lit the bonfire of unemployment were the July Riots in the capital province Gauteng and the city of Durban. The riots were sparked after ex-President Jacob Zuma was convicted of contempt of court. Loyal supporters took to the streets but the initially peaceful protest turned violent as rioters looted and burned small businesses; the riots have been estimated to cost the already struggling South African economy $3.3 bn and put 150 000 jobs at risk through looting.
The next few months will be critical for South Africa in terms of recovering from Covid-19 and getting people back to work. Many records show that South Africa now has the highest unemployment rate in the world but I'm not sure whether this would be a record they were looking for.
Written by Kaitlyn Damant
Research compiled by Jonas Theaker