5 May 2014

South Africa: Unemployment Rate Rises in First Quarter

South Africa's unemployment rate rose to 25.2% in the first quarter of 2014, up from the 24.1% in the fourth quarter of 2013, Statistics South Africa (Stats SA) said on Monday.

The unemployment rate increased in the first three months of 2014 from the previous rate of 24.1%, according to the Quarterly Labour Force (QLF) report released by Stats SA.

The number of people without work increased by 237 000, showing that this amounted to five million people, noted the report that polls households.

Year-on-year figures show that both employment and unemployment rose by 496 000 and 205 000 respectively.

The unemployment rate increased by 0.2%, while the absorption rate and labour force participation rate increased by 0.7% and 1% respectively.

A decrease in employment was mainly driven by a decrease in employment in the transport, storage and communication industries.

"Between the fourth quarter of 2013 and the first quarter of 2014, the number of employed people declined by 122 000 mainly due to decreases observed in transport (66 000), community and social services (42 000) and trade (38 000) industries," noted the report.

Releasing the report, Statistician General Pali Lehohla said that unemployment is the main poverty driver in the country.

In the first quarter, formal sector employment increased in the construction and manufacturing industries.

In its reaction to the data, Nedbank economists said the rise in unemployment reflects a sharp drop in employment in the informal non-agricultural sector jobs, saying it is likely to remain high.

"The unemployment rate is likely to remain high in the short term given weak domestic demand, rising input costs, labour disputes, significant infrastructure constraints and other regulatory issues in some of the key sectors.

"Today's figures provide further evidence that local economic performance is still well below potential. However, we anticipate that the Reserve Bank will tighten policy gradually by a cumulative 50 basis points over the next few months as inflation rises above the target range," said Nedbank.

According to the report, youth continued to be vulnerable in the labour market, although their level of educational attainment has improved over 2008 to 2014. "In the first quarter of 2014 the unemployment rate among young people aged 15 to 34 was 36.1%, which is 3.4% higher than in the first quarter of 2008," it said.

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