HomeBusiness DigestSA job creation far too slow to halve jobless rate by 2014 ...

SA job creation far too slow to halve jobless rate by 2014 

SOUTH Africa’s unemployment rate was static at 25,5% in March unmoved from a year ago and suggesting that faster growth in the economy was doing little to spur job creation.

Employment in the formal non-farm sector picked

up in the second quarter of this year, but fell well short of the level seen as needed to meet an official goal of halving the jobless rate by 2014. “Economic growth has not been particularly labour absorbing,” said Standard Bank economist Shireen Darmalingam. “The labour market remains in relatively poor shape.”

The number of people out of work rose to 4,34 million in March from 4,28 million in the same month last year, Stats SA said in a biannual Labour Force survey released yesterday.

During that period there was a net gain of 197 000 jobs — with a steep fall in the informal agricultural sector offset by a bigger combined job increase in community and personal services, finance, and construction.

Including discouraged work seekers — jobless people who haven’t looked for work in a month — the unemployment rate rose to 38,3% from 37% in September, Stats SA said.

“Unemployment remains at unacceptably high levels,” said Patrick Craven, spokesman for trade union federation Cosatu. “The rate at which new jobs are being created is not anywhere near what is required to meet the government’s target of halving unemployment by 2014.”

Employment in the formal nonfarm sector rose by 3% in the second quarter of this year versus the same period last year, and showed 53 000 jobs were created between March and June, a separate Stats SA survey showed.

That reflected a rise of about 75 000 jobs in the first half of this year — which compares poorly with an average annual increase of 500 000 over each of the past three years.

During that period, the economy grew by an average 5% each year — the fastest in more than two decades.

Growth is expected to slow this year in response to higher lending rates, which are starting to curb consumer spending, the economy’s main engine.

The Reserve Bank has raised interest rates by a cumulative three percentage points over the past 14 months in a bid to cool rising inflation, with a further hike seen as likely.

Darmalingam calculates that the economy would need to add 558 000 jobs a year to reduce the jobless rate to 14% by 2014.

The number of jobs created with every one percentage point increase in economic growth was small, implying the economy would have to expand faster to significantly reduce unemployment, she said. With Poppie Mphuthing — businessday.

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