South Africa holds a massive unemployment rate, but is there hope?

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Seeing someone begging at a busy intersection, pleading for a job and food has become a standard across NKZN.

Add the fact that ArcelorMittal is preparing to retrench hundreds of more people during 2020, one cannot ignore the fact that the unemployment rate is not only high but is set to grow even higher.

But just how bad is the unemployment rate in South Africa?

The Centre of Development and Enterprise (CDE) claims South Africa has the deepest crisis of unemployment in the world. In fact, CDE states only 42% of the country’s adults work, a figure which CDE says compares poorly against norms of around 60% in the rest of the world and higher in some parts of the developing world.

Furthermore, CDE claims one of the contributing factors to the high unemployment rate is because economic growth is low.

In its report, published in January 2020, CDE explains mass unemployment first emerged during the 1970s, deepening ever since, with economic growth being too slow to absorb new entrants into the labour market.

CDE claims the causes of slow economic growth are largely political. Between 1970 and 1994, CDE explains the core political constraint was apartheid and the attendant instability and international sanctions.

However, the CDE explains that since 2008, the issues have been about the collapse in governance and outright looting that allegedly took place during President Zuma’s tenure.

As the CDE paints a bleak picture, Stats SA has published its latest Quarterly Labour Force Survey, which shows South Africa’s unemployment rate has not changed over the last three months.

Data from the fourth quarter of 2019 reflects that the official unemployment rate remains unchanged at 29.1% compared to the third quarter of 2019.

According to Stats SA, the number of employed people has increased by 45 000, rising to 16.4 million people now securing employment. The number of unemployed people decreased by 8 000, dropping down to 6.7 million.

This sees a 0.2% increase in the number of people joining the labour force. The unemployment rate and the absorption rate remains the same, at 29,1% and 42,4%, respectively. However, the labour force participation rate decreased by 0,1 of a percentage, dropping to 59,8% in the fourth quarter of 2019.

Stats SA explains the largest employment increase was observed in the formal sector (117 000), followed by the Agriculture sector with 6 000 in the fourth quarter of 2019.

However, employment in the informal sector declined by 77 000 in Q4: 2019, while employment in private households remains unchanged.

Stats SA claims that while the official unemployment rate remained unchanged at 29,1%, the official unemployment rate has decreased in six of the nine provinces.

The largest decrease was recorded in the Northern Cape, going down by 2,9 percentage points, followed by Mpumalanga which went down by 1.7 percentage points. KwaZulu-Natal saw a decrease of 0.6 percentage of a point.

Local councillor, Matthew Shunmugam explains one only needs to look at the occupancy of the stores in the CBD.

“There are a number of vacant stores in Allen Street and Scott Street, both of which are main roads in Newcastle.”

Cllr Shunmugam explains the global economy has also influenced Newcastle, which can be seen in ArcelorMittal retrenching several people from its workforce, as well as Karbochem, retracting itself from the rubber market and then the closure of DCD Venco.

With the unemployment rate standing at 29.1% and uncertain times ahead for Newcastle, with ArcelorMittal planning further retrenchments, what does the future have in store for South Africans and Newcastillians?

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