The Charts That Show South Africa's Unemployment Problem

  • Economy growth last year was the slowest since 2009 recession
  • GDP recovery unlikely to stop rise in unemployment, IMF says
Photographer: Marco Longari/AFP via Getty Image

South Africa’s jobless rate rose in the three months through March and is now at a 14-year high.

The unemployment rate increased to 27.7 percent in the first quarter of 2017 from 26.5 percent in the previous three months, Statistics South Africa said in a report released on Thursday in the capital, Pretoria. That’s the highest since 2003, according to data from the International Monetary Fund. Joblessness according to the expanded definition, which includes people who have given up looking for employment, rose to 36.4 percent from 35.6 percent, the statistics office said.

Africa’s most-industrialized economy expanded by 0.3 percent in 2016, the slowest pace since a 2009 recession, due to a drought, low commodity prices and weak demand from its main export markets. That’s complicated employment creation, with the number of people without jobs rising 433,000 to 6.2 million in the quarter.

“Employment growth is just not nearly fast enough to absorb enough people and so the unemployment problem and the fiscal pressures and risks continue,” Elna Moolman, an economist at Macquarie Group in Johannesburg, said by phone.

The central bank forecasts expansion in gross domestic product of 1 percent this year and 1.5 percent in 2018. The pace of recovery in both years is unlikely to prevent a further increase in unemployment, the International Monetary Fund said last month.

Agriculture jobs declined by 44,000 and employment in trade by 15,000, the statistics office said. The manufacturing industry employed 62,000 more people in the first quarter than in the preceding three months. Community and social services, which include the government, is the largest employer in the economy.

Joblessness increased in seven of the nine provinces, the statistics office said. The unemployment rate is lowest in the Western Cape province, the only province where the opposition Democratic Alliance is in charge, and highest in the Free State.

The government pledged in an economic blueprint released five years ago to reduce unemployment to 14 percent by 2020 and 6 percent by 2030. The ruling African National Congress, which suffered its worst election performance at a municipal vote in August, will elect new leaders at the end of this year.

Fitch Ratings Ltd. and S&P Global Ratings and both cut their assessments of the nation’s foreign-currency debt to junk in April following a cabinet reshuffle in which Pravin Gordhan was replaced as finance minister. The companies cited fears about polity uncertainty and slow economic growth in their announcements.

The rand strengthened 0.6 percent to 13.0344 per dollar as of 1:50 p.m. in Johannesburg on Thursday. Yields on rand-denominated government bonds due December 2016 fell 4 basis points to 8.55 percent.

— With assistance by Simbarashe Gumbo

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