Unemployment numbers reflect a depressed overall economic environment under covid-19 restrictions, says SEIFSA.
JOHANNESBURG, 01th JUNE 2021 – The Quarterly Labour Force Survey (QLFS) data released today by Statistics South Africa (Stats SA) indicating unemployment level of 32.6%, reflects the deep depressed impact of Covid-19 restrictions on South African employment and overall economic activity across all major economic sectors, the Steel and Engineering Industries Federation of Southern African (SEIFSA) said today.
According to Statistics South Africa, South Africa’s unemployment rate rose to 32.6% in the first quarter of 2021 from 32.5% in the previous quarter. It was the highest jobless rate in the 13 years, amid the ongoing pandemic, which has contributed to the depressed economic environment, resulting in low investment activity. SEIFSA’S Chief Economist Chifipa Mhango said the level of unemployment in South Africa is above other economies such as Brazil (14.7%), China (5.3%), India (6.5%) and Russia (5.2%); which are in an economic development partnership.
Data from Statistics South Africa indicates decreases recorded in Construction (87 000), followed by Trade (84 000) and Private Households (70 000). The largest increases in employment were recorded in Finance (215 000), Utilities and Community and Social Services (16 000 each) from fourth quarter 2020 to first quarter of 2021.
Mr Mhango indicated that, job creation should be seen as a consolidated effort by both Government and the private sector. The trends in jobs being lost in key demand driving sectors of the Metals and Engineering sector such as Construction is worrisome. For unemployment levels to ease down, investment driven economic recovery is key, said Mr Mhango. The South African Government’s recently unveiled economic revival plans presented by Minister of Finance Tito Mboweni as well as implementation of the R791.2 billion of public sector infrastructure development for the next three fiscal years was welcomed by the Metals and Engineering Sector.
Despite the depressing unemployment data, in recent month from January 2021, we are beginning to see signs of improvement in overall business confidence levels, and from the Metals and Engineering Industry perspective; PMI returning to expansionary territory of above 50 index level coupled with a softening improving manufacturing output are encouraging news. Mr Mhango said that “we can expect the South African economy to rebound in 2021, as economic activity gradually recovers amid confidence returning for industrial activity to reach higher capacity utilization as the COVID-19 vaccine begins to be rolled out”. However, caution is provided by the advent of a third wave of the COVID-19 infections. South Africa will therefore need to keep COVID-19 suppressed if the current recovery is to be sustained.
The contribution of the Metals and Engineering Sector to the overall employment remains key for the South African economy. The sector lost almost 35 000 jobs in 2020 alone. Persistent challenges faced by businesses in the Metals and Engineering Sector such as high electricity costs, unreliable energy supply as well as disruption in raw material supply, rising logistics costs and imports have continued to weigh negatively on the industry, thus affecting job creation and its overall contribution to manufacturing sector employment.
Mr Mhango stated, that “it is, therefore, important that engagements between Government and all of the Industry’s stakeholders continue amicably in searching for solutions to these challenges, in addition, the much-awaited Steel Master Plan and its urgent implementation is likewise imperative for the sector”, he concluded.