Thousands lose their jobs as SA reels from recession

This news signals another sharp contraction in the economy after a fall in output in last year's fourth quarter, which would steer SA into its first recession in 17 years.

Most of the jobs lost were in sectors hit hardest by the global downturn — manufacturing and trade — but the booming construction industry was also affected.

“The overall economic trend is negative,” said Kafiloe Masiteng, a senior official at Statistics SA.

“Unemployment is increasing. Many people are losing their jobs.”

The official jobless rate, which excludes people not seeking work actively, rose from 21.9% in the final quarter of last year.

But the 23.5% jobless rate is back where it was a year ago.

According to the expanded definition of unemployment, which includes “discouraged” work seekers, the jobless rate climbed to 31.2% from 29.3%, Stats SA said.

Investec economist Kgotso Radira said the rise in the jobless rate pointed to the “severity” of SA's recession, with the economy likely to contract 1% this year.

“It now seems certain that the unemployment rate will be above 25% by year-end,” he said.

A cumulative 3.5 percentage point fall in lending rates since December would not boost the flagging economy, and the Reserve Bank would cut rates again at its policy meeting this month, he said.

SA's jobless rate fell steadily from a peak of 29.3% in 2003 to 21.9% in the final quarter of last year. But it is still one of the highest in the world.

Job creation in SA has also lagged economic growth, which quickened to an average pace of 5% between 2005 and 2007.

“SA's unemployment rate remains far too high by historical and international standards,” said Stanlib economist Kevin Lings.

The economy is expected to shrink this year. Lings said the recession would erode employment in the coming year, especially among unskilled workers.

The Labour Force Survey (LFS) from Stats SA showed that the formal sector of the economy shed 88,000 jobs while the informal sector lost 96,000. Lings said official spending on infrastructure might help cushion the blow to jobs.

Surprisingly, a leading survey yesterday showed that business confidence picked up last month, buoyed by gains in the rand, local share prices and trade.

The South African Chamber of Commerce and Industry said: “The improvement could mark a turnaround that may still be slow and weak but which could pick up momentum towards year-end.”

Stats SA mounted a convincing defence of its previous LFS survey, which showed that employment rose in the fourth quarter of last year, while the economy shrank for the first time in a decade.

Masiteng, who is the deputy director-general for population and social statistics at the organisation, said scepticism was warranted.

But the data showing a 1.8% fall in gross domestic product (GDP) was seasonally adjusted and annualised, unlike the jobs figures.

When unadjusted GDP figures were used, headline figures went in the same direction as the LFS fourth-quarter results, she said.

In the first quarter of this year, wholesale and retail trade shed 143,000 jobs while construction lost 65,000 and manufacturing 62,000, Stats SA said.

Source: Business Day

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