JOHANNESBURG – South Africa is forecast to set an unwelcome world record this week when its statistics agency is predicted to report unemployment rose to a record 34.9% in the second quarter, which would be the highest of 83 countries tracked by Bloomberg.
Ayanda Mbatha was among the unlucky ones who joined the ranks of the unemployed in the period. Dressed in a shirt and tie, the 26-year-old mechanical-engineering graduate spent four weeks at intersections in the affluent Johannesburg suburbs of Hyde Park and Sandton advertising his skills on a placard around his neck and with copies of his CV in his hand, in the hope a passing motorist could help with a job offer.
“Sometimes I’d think ‘I don’t have a job, I was retrenched, what am I going to do? There’s no salary coming in anymore’,” he said in an interview.
Mbatha is one of an estimated 3 million people who lost their jobs as restrictions to curb the coronavirus pandemic shuttered all but essential services in Africa’s most industrialized economy. Most business were shut for five weeks from March 27 and some reduced staff or closed down permanently because of the lockdown. A study by a group of 30 academics and researchers shows 1.5 million more people were furloughed.
What Bloomberg’s Economist Says
A lot of the second-quarter job losses should be reversed once the economy opens up, but the question is by how much and how soon? We think the recovery will be protracted given the weak growth outlook. We also expect a slight uptick in the structural unemployment rate as some who were laid off during the crisis remain permanently unemployed. – Boingotlo Gasealahwe, Africa economist.
South Africa faced an unemployment crisis even before the virus. The jobless rate has been above 20% for at least two decades, even though the economy expanded by 5% or more a year in the early 2000s. Analysts cite an education system that doesn’t provide adequate skills and strict labor laws that make hiring and firing onerous and apartheid-era spatial planning that make it difficult for job seekers to enter and remain in the formal workforce as part of the problem.
President Cyril Ramaphosa pledged to boost economic growth to 5% by 2023 and to prioritize employment when he was campaigning to become leader of the ruling party three years ago. Since becoming president of the country, he hosted a jobs summit that aimed to create 275,000 positions annually and launched a program to create job opportunities for young people.
The results have been patchy and a lack of urgency in implementing policies to boost growth and convince businesses to invest are hindering progress.
“A lot of the mismatch that we see between government solutions and the problems that we have is because government is making policy for an economy that doesn’t exist,” said Sithembile Mbete, a senior lecturer in political studies at the University of Pretoria.
The crisis may get worse.
Just keeping the employment rate unchanged would require the economy — stuck in its longest recession in 28 years — to grow by 1.5% to 2.25% a year to match a 1.5% annual increase in the working-age population, according to Elna Moolman, an economist at Standard Bank Group Ltd. Population estimates show there are 59.6 million people in South Africa, of whom almost 30% will enter the labor market in the next decade.
“Based on scenarios for the post-2020 economic recovery, it could take three to seven years before employment returns to 2019 levels,” said Christie Viljoen, a Cape Town-based economist at PwC.
More than half of the people counted as officially unemployed did not finish high school, and this skills deficit combined with number of job seekers mean they will continue to struggle to find employment. Some of these people are disproportionately affected by shocks such as the virus because they’ve never held any formal job.
For the skilled Mbatha, pounding the pavement paid off.
A picture of him at the intersection was shared widely and made its way to a director of an automations company seeking a project engineer. He started work in September, after being jobless for four months, and is now using the network of recruiters and career coaches that reached out to help him to guide others.