On the face of it, SA’s most recent jobs data looks positive, with a declining unemployment rate. But a closer look at the numbers shows how precarious is the slope that the country is facing.
According to Stats SA’s Quarterly Labour Force Survey, released last week, the unemployment rate dropped to 34.5% in the first quarter of 2022 — 0.8 percentage points down on the record 35.3% unemployment rate reached in the last quarter of 2021.
That means an additional 370,000 people became employed over the period. At the same time, however, the actual number of unemployed people fell by just 60,000. That’s because the labour force increased by 310,000.
The numbers here are a bit misleading. The labour force refers to the cohort of people in our population who are able to work; it’s not an accurate reflection of those who are available to do so — school-going children, for example. It’s simply that the Labour Relations Act — the law governing work and employment in SA — counts anyone over the age of 15 as being part of the labour force.
SA’s manpower is low compared with, say, the 77% average in OECD countries, or 89% in Sweden. Just 56.9% of the working-age population is working or looking for work
More concerning is a related statistic: the labour force participation rate.
The International Labour Organisation describes this as “a measure of the proportion of a country’s working-age population that engages actively in the labour market, either by working or looking for work: it provides an indication of the size of the supply of labour available to engage in the production of goods and services, relative to the population at working age.”
It can also be thought of as the “manpower” of the country.
SA’s manpower is a low 56.9% compared with, say, the 77% average in Organisation of Economic Co-operation & Development countries, or 89% in Sweden. It means that just 56.9% of the working-age population is working or looking for work.
Importantly, in the first quarter the labour force participation rate increased by 0.6 percentage points — less than the 0.8 percentage point decline in the unemployment rate. This tells us about an important labour dynamic in the population: even as conditions are improving, some workers are not returning to productive activity, despite their skills or the need in the economy. It speaks to hopelessness and despondency.
Picking up the pace
The Northern Cape provides an example. The unemployment rate in the province is 24.9% — the lowest in SA, according to last week’s numbers. The second-lowest is the Western Cape, at 25.2%. The Northern Cape’s manpower rate, however, sits at 52%, while the Western Cape, with similarly low unemployment, has a manpower rate of 63%.
The Northern Cape’s labour force participation rate is lower than that of the country as a whole — even as the national unemployment rate is 10 percentage points higher.
The province, which has large reserves of the so-called minerals of the future (manganese, zinc, lead, cobalt, nickel and copper), has a significant role to play in the mining, development and export of these minerals — and, indeed, in the energy transition and the “new” economy more generally. But to be able to play this role, it needs a keen and engaged labour force — manpower, as it were. And, as we’ve seen, this manpower, in both the Northern Cape and SA more generally, is concerningly low.
Why is this a problem? The investment drives being undertaken at both provincial and national levels, while vitally important, cannot succeed unless the authorities can raise the labour participation rate. And this is not something that can be done simply by announcing a drop in unemployment.
As we have seen, even as more jobs become available, actual labour participation remains low. Fixing this requires a number of interventions — and these must be put in place now, before investors and business lose confidence, and a continued cycle of underinvestment and decreasing labour performance takes hold.
* Payi is an economist and founding director of Nascence Advisory & Research
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