GDP growth does not mean increased employment, says labour department

Despite signs of South Africa’s economy starting to claw its way out of a significant and sustained decline, unemployment figures are still in a slump, the Department of Employment and Labour said. 

South Africa’s gross domestic product (GDP) grew by an estimated 13.5% in the third quarter, giving an annualised growth rate of 66.1%, Statistics SA announced on Tuesday.

However, the country is far from being out of the woods, the department’s director-general, Thobile Lamati, said. 

“The results in the third quarter of 2020 appear to suggest that the increase in the GDP translates into increased employment, but it does not indicate that South Africa is out of trouble, with the persistently high number of unemployed people in the country.”

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Despite signs of economic growth, labour absorption rates increased by just 1.2 percentage points, from 36.6% in the second quarter to 37.5% in the fourth quarter of this year. 

Unemployment levels rose to 6.5 million in the third quarter of the year, an increase of more than 2.2 million (52.1%), when compared to the second quarter.

The department said the increase in unemployment levels resulted in an increase of 2.8 million (15.1%) workers in the labour force, both employed and unemployed, in September 2020. This was due to an increased amount of reported economically inactive people, Lamati said. 

Unemployment rates now stand at 43.1%.

“The number of employed persons increased by 543 000 to 14.7 million in the third quarter of 2020, compared to 14.1 million in the second quarter of 2020. 

“The data have shown that all sectors reported employment gains, with the largest in the formal sector (non-agricultural), with 44% and the least being in the agriculture sector, with 1.6% in the third quarter of 2020.

“However, this comes with the caution that employment is still well below employment loses reflected during quarter two [under] lockdown restrictions,” Lamati said. 

Employment increases were recorded in all nine provinces, the largest being in Limpopo, with an uptick of 116 000. The lowest increase was in the Northern Cape, with 31 000 additional employees recorded. 

The utilities industry recorded 23 000 job losses, and the transport sector 7 000. 

Between the second and third quarters of 2020, the finance sector gained 200 000 employees, 137 000 more workers were recorded in the community and social services industry, and in private households, 116 000 more employees were confirmed. 

Compiled by Nica Richards. Additional reporting by Ina Opperman. 

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