Eastern Cape’s unemployment rate soars to 40%

Predictions that SA's unemployment rate could rise to as much as 50% appear well on course  after the 30% mark was breached for the first time ever on Tuesday.

In May, some of the country's leading economists suggested half the country's labour force could be put out of work by the time Covid-19 was through with SA's economy.

But not even analysts predicted the findings of Stats SA's latest Quarterly Labour Force Survey, released on Tuesday.

These showed there were 7.1 million jobless South Africans during the first quarter of 2020.

Even by economists' most liberal estimates, the figure was not expected to breach the 30% mark.

But breach it did, coming it at a staggering 30.1%. 

The Eastern Cape’s unemployment rate soared to 40.5% during quarter one (Q1) — a 20.2% hike in year-on-year unemployment.

DA MPL Bobby Stevenson was under no illusions about what was to come in the province.

The massive difference in the province's non-metro areas’ unemployment rate of 45.1% and the expanded unemployment rate of 56.5% was “the real shocker” in the statistics, according to Stevenson.

“The real slaughter will come in the second quarter, when the impact of the lockdown in response to Covid-19 starts to play out,” Stevenson said.

“This unfolding humanitarian crisis means over half the working population in the more rural areas of the province were without work before the lockdown was implemented. This highlights the massive hardship that families are going through as they struggle to simply survive at a time like this.”

Investec also did not pull any punches in terms of what lay ahead.

The bank said the unprecedented Covid-19 situation would exacerbate the country’s “dire unemployment predicament as business closures and cutbacks accelerate”.

The increase in joblessness came in the months largely before lockdown measures came into effect on March 27, all but halting economic activity.

President Cyril Ramaphosa acknowledged on Monday the economic relief measures the government had introduced to shield businesses from ruin would never be enough.

To give some idea as to the dwindling numbers of employed people in the Eastern Cape, in the first quarter (Q1) of 2019, the province had 781,000 jobless people. That figure jumped to 939,000 for Q1 this year.

The province’s expanded unemployment rate — which included those unemployed people who have given up looking for work — rose to 48.9% in the first quarter of 2020.

The unemployment rate for non-metro areas in the province stood at  45.1% for 2020 Q1 — a massive 29.1% up from the same period a year before. The expanded unemployment rate for 2020 Q1 is at 56.5%.

Nationally, quarter-on-quarter job losses mainly occurred in finance (50,000), services (33,000), agriculture (21,000) and transport (17,000), but gains were reflected in trade (71,000), private households (30,000) and mining (6,000).

“This is the first ever that we have hit the 30% mark,” statistician general Risenga Maluleke said.

“It is true that is pre the Covid-19 lockdown. Can we expect more? Allow us to measure and we will come back and tell you.”

Stats SA noted that due to the nationwide lockdown, face-to-face data collection was suspended from March 19 at the tail end of its work for the survey.

Some of the country’s big firms, such as steel producer ArcelorMittal SA Ltd, food producer Tiger Brands and third-biggest telecom operator Cell C, have already announced plans to cut jobs.

Writing in his weekly newsletter on Monday, Ramaphosa said for a country like SA, which  was already facing an unemployment crisis and weak economic growth, difficult decisions and difficult days lie ahead.

“We would urge that the difficult decisions are taken with care and with due regard to balancing the sustainability of companies and the livelihoods of workers. It is important that whatever is done is underpinned by ensuring a just transition to all concerned.”

In May, economist Mike Schussler said unemployment could soar past 50% if the economy contracted as dramatically as it has in the US, where 30 million people had filed for unemployment relief.

 South African Chamber of Commerce and Industry CEO Alan Mukoki agreed, saying “the prospect of having the unemployment rate climb to 50% is not out of line”. — Additional reporting by TimesLive, DispatchLive and Reuters

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