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Free State creates more jobs but more remain unemployed

Staff Reporter

At least 20 000 new jobs were created in the Free State between April and June this year but the official unemployment rate in the province jumped 0.9 percentage points to 36.5 percent, Statistics South Africa (Stats SA) has said.

However, using the expanded definition for unemployment, which includes discouraged work seekers, the jobless rate in the province grew by 1.8 percentage points from 43.4 percent to 45.2 percent.

With a population of close to 2.9 million people, the province now has about 723 000 people with jobs.

In its Quarterly Labour Force Survey for the second quarter of this year, Stats SA said the hard lockdown implemented last year has had a major effect on labour because some companies are still trying to recover.

“In a quest to protect South African citizens from the novel coronavirus, the government announced a national lockdown that brought about a shutdown of the economy, which in turn resulted in a shock in the labour market and a big change in the way people went about doing their work,” said Statistician General Risenga Maluleke in the report.

Nationally, 54 000 people lost their jobs in the second quarter, leaving the country with 14.9 million employed people.

The country’s official unemployment rate increased by 1.8 percentage points to 34.4 percent in the last quarter – this is a record high.

The country’s expanded unemployment rate rose by 1.2 percentage points to 44.4 percent.

Responding to the report, the Nedbank economic unit said while there were indications of potential growth this year, the discovery of a COVID-19 strain scuppered all projections and many companies were forced to lay off workers.

“Recent indicators suggest that the rate of economic growth moderated in the second quarter, with economic activity disrupted by the onset of the Delta variant, resulting in tighter lockdowns both locally and abroad, denting confidence in the process,” said Nedbank.

An industry breakdown nationally shows that the largest job losses occurred in the financial sector, which shed 278 000 positions, followed by the community and social services industry that includes the government, down 166 000 jobs.

The manufacturing sector shed 83 000 jobs as it was hurt by slower growth in some of the country’s major trading partners and frequent load-shedding.

Nedbanks’s economists believe the outlook for the job market will remain poor on the back of subdued and uncertain economic conditions, particularly after the July riots in KwaZulu-Natal and Gauteng.

“Although the economy is slowly moving towards higher ground, private firms were hard hit by last year’s strict lockdown, while the repeated return to tighter restrictions and the destruction caused by the riots in July continues to undermine confidence and disrupt production, robbing firms of the space to recover and the ability to form a clear image of future demand conditions,” said the group.

“As a result, companies are hesitant to hire and to expand operations as economic conditions could easily take a turn for worse.

“The public sector cannot fill the void left by a retreating private sector given its stretched finances and already bloated staff numbers.”

Employment, according to Nedbank, is likely to start edging up in 2022, but the unemployment rate will remain structurally high, as more discouraged work seekers will return to the job market as the economy gathers some pace.

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