Is South Africa’s unemployment rate really only 10%?

Comments from a banker this week about South Africa’s unemployment rate had economists debating whether it is really 32.9% or only 10% if the informal sector is included in the data.

Gerrie Fourie, CEO of Capitec, said this week that Statistics SA should rethink how it measures unemployment, arguing that when the vast informal sector is considered, the unemployment rate of 32.9% could be closer to 10%. 

“We talk about an unemployment rate of 32%, but Statistics SA does not count self-employed people. I think that is an area we must correct. The unemployment rate is probably actually 10%. Just go look at the number of people in the township informal market who sell all sorts of stuff and have a turnover of R1 000 per day.

“To grow South Africa, we must understand what is happening in the informal market. If we really had a 32% unemployment rate, we would have unrest. If you go to the townships, most people have back rooms to rent out; everyone is doing something. If we talk about job creation, let’s go out and encourage these entrepreneurs.”

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Look at Mexico’s unemployment rate as an example

Fourie said Statistics SA ignores the country’s large emerging market and called entrepreneurs “discouraged” job seekers. He used the example of Mexico to illustrate his point that South Africa must rethink how it defines unemployment.

“In Mexico, where Capitec has exposure through its investment in Avafin, unemployment is low because it embraced the informal economy.”

“The formal economy in Mexico is 45%, while the informal economy is 55%.”

“They know who those informal businesses are and what they do. We have to change the narrative in South Africa. We have a completely wrong narrative.”

He believes the size of South Africa’s small, medium and micro enterprises is made up of 3 million formal businesses and a further 3 million ‘emerging’ businesses.

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Statistics SA says its unemployment statistics are solid

However, statistician general, Risenga Maluleke, says Statistics SA stands by the veracity of its methods in measuring labour market statistics and in particular the Quarterly Labour Force Survey. “We follow the International Labour Organisation’s guidelines in dealing with labour markets in our country.

“We are one of the many countries that do it and in measuring the informal sector in particular. We use the survey of employers and self-employed people and publish the informal sector report. Since the first quarter of 2025, our unemployment rate was sitting at 32.9%.”

“To suggest that our unemployment rate is sitting as low as 10% would be misleading the nation. In the space of unemployment and underemployment, which remain challenges to our nation. South Africa has 63 million people, according to our population estimates for 2024.”

“Of those, 41.7 million are in the working age group between the ages of 15 and 64. Out of that we have 25 million people in the labour force who are either unemployed or employed. When they are unemployed, they remain actively looking for employment.

“That is the number 8.2 million that represents the 32.9% as our unemployment rate. If we were to take the argument that our unemployment rate is sitting at 10%, it would mean that that 2.5 million people that are unemployed in South Africa out of the 25 million people in the labour force.”

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Quarterly Labour Force Statistics cover informal sector as well – Maluleke

Maluleke says considering the informal sector in particular, there is the Quarterly Labour Force Survey of employers and the self-employed, as well as the informal sector report. “To be specific, as of the first quarter of 2025, there were 3.3 million people who were employed in the informal sector, and that represents about 19.9% of the total number of people who are employed nationally.

“The informal sector faces challenges not only in our country but the world over. In particular to our country, we currently do not have a well-established register for the informal sector enterprises as we have for the formal sector.”

Maluleke says Statistics SA is working with the Department of Trade, Industry and Competition as well as the Department of Small Business. “We must rise to the challenge to make sure that we have a proper register in place to enable Statistics SA to sample from it.

“We have to indicate to the nation that we stand by the methods that we use to collect and publish our labour market statistics. They are solid.”

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Way Statistics SA measures unemployment is not entirely accurate

Maarten Ackerman, chief economist at Citadel, agrees that the way Statistics SA measures unemployment is not entirely accurate. “Their methodology largely considers individuals in formal employment who earn a salary and receive a payslip.

“However, work done by GG Alcock on the informal economy, along with significant research by Capitec, shows that the informal sector plays a crucial role in the South African economy and makes a meaningful contribution to GDP.

“Many South Africans earn an income or participate in the economy through informal trading, small-scale services and other non-salaried activities. These individuals may not be formally employed or receive payslips, yet they are economically active as they transact, save and even access financial services.”

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There would be social unrest if unemployment rate was over 30%

Ackerman says if South Africa truly had an unemployment rate of over 30%, with that many people having absolutely no source of income, we would likely see far greater levels of social unrest and instability.

“The fact that this has not happened on a large scale suggests that many people are finding ways to survive outside the formal economy. Unfortunately, there is currently no comprehensive method to formally quantify the size and impact of the informal sector, which makes the true unemployment rate difficult to determine.

“I still, I agree that the actual figure is likely significantly lower than what is currently reported by Statistics SA.”