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Unemployment increases slightly in 3rd quarter

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Unemployment increases slightly in 3rd quarter

by BuaNews Online
26 Oct 2010
BuaNews Online
BuaNews Online

Unemployment rose to 25.3 percent in the third quarter compared to the second quarter's 25.2 percent, Statistics South Africa (Stats SA) said on Tuesday.

"The levels of the unemployed hardly moved from quarter-to-quarter and resulted in a virtually unchanged unemployment rate of 25.3 percent, up by only 0.1 of a percentage point from what it was in the second quarter of 2010.

"While the unemployment rate remains almost unchanged, the levels of unemployment in South Africa remain high at approximately 4.4 million," said Stats SA in its Quarterly Labour Force Survey.

Formal sector employment contracted by 0.5 percent or 45 000 jobs while the informal sector employment went down by 0.6 percent or 14 000 jobs.

According to Stats SA, the loss of jobs in the formal sector was observed mainly in establishments that employ less than 50 people, while big establishments (that employ over 50 people) it seems were able to generate new jobs in the third quarter.

The Free State had the highest unemployment rate at 29.5 percent.

"The disappointing employment figures suggest that business confidence in most industries remains fragile, with companies still focusing on cutting costs and improving efficiencies as opposed to expanding operations and employing, despite four consecutive quarters of economic growth.

"The current employment trends suggest that business remains uncertain about the strength and sustainability of the current economic recovery," said Nedbank economist Nicky Weimar.

Weimar said that Nedbank expects the economic environment to improve further.

"Employment levels are likely to remain under pressure during the remainder of 2010 and only improve marginally in 2011 as the economic recovery has so far been too weak to place much pressure on capacity.

"Most companies expect slower and more subdued economic growth over the next three years than was the case during the previous upswing," she explained.

Weimar confirmed that the economic recovery remained fragile. Together with subdued inflation and a strong rand, this suggested there was a chance for a rate cut.

"Although we expect the Reserve Bank's Monetary Policy Committee to pause over the next two meetings, with a possible 50 basis point cut in March next year, the risk remains firmly on the downside throughout this period," said Nedbank. - BuaNews

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