June 23, 2020 / 11:22 AM / 10 days ago

South Africa's unemployment rate hit record high before virus

PRETORIA/JOHANNESBURG (Reuters) - South Africa’s unemployment rate hit a record high in the first quarter of this year as key sectors including agriculture shed jobs, data showed on Tuesday, highlighting weakness in the economy even before it was battered by the COVID-19 pandemic.

Africa’s most advanced economy was already in recession before the pandemic hit. Authorities imposed a strict lockdown at the end of March, further squeezing businesses and consumers.

The unemployment rate of 30.1% was up from 29.1% in the final quarter of last year, Statistics South Africa said in its quarterly labour force survey.

“This is the first (time) ever that we have hit the 30% mark,” Statistician General Risenga Maluleke said.

There were 7.1 million people without jobs in the first quarter, up from 6.7 million in the previous quarter, Statistics South Africa said.

Under the expanded definition of unemployment, which includes people who have stopped looking for work, the rate was 39.7% compared with 38.7% in the previous quarter.

The outlook for the labour market remains gloomy, with some of the country’s big firms such as steel producer ArcelorMittal South Africa Ltd, food producer Tiger Brands and third-biggest telecom operator Cell C already announcing plans to cut jobs.

SEVERE IMPACT

With no significant government support offered during the lockdown to the informal, or unregulated, sector — which according to the World Bank provides employment to 25-30% of South African workers — the impact has been severe for many.

President Cyril Ramaphosa last week announced a further easing of lockdown restrictions, allowing businesses such as cinemas, casinos, theatres, hair salons and spas to operate under strict social distancing rules.

Job seekers stand outside a construction site ahead of the release of the unemployement numbers by Statistics South Africa, in Eikenhof, south of Johannesburg, South Africa, June 23, 2020. REUTERS/Siphiwe Sibeko

But some small businesses fear recovery will take longer.

“Looking at the fact that we’ve cut down on staff coming in and looking at shifts, I think... our revenue is also going to be cut by half in the long run,” Candi & Co salon owner Cola Mthembu said on Tuesday as she opened her salon for the first time since late March.

“We’re just being hopeful that we still keep our doors opened.”

Writing by Olivia Kumwenda-Mtambo; Editing by Kirsten Donovan and Gareth Jones

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