Outlook seems grim for falling jobless rate

Jonathan Goldberg & Grant Wilkinson

Global Business Solutions

At the end of February, the results for Q4:2022 of the Quarterly Labour Force Survey (QLFS) were released by Statistics SA These revealed a slight reduction in the country s unemployment rate The official unemployment rate experienced a 0 2% decline, dropping from 32 9% in Q3:2022 to 32 7% in Q4:2022

Furthermore, the expanded definition of unemployment also witnessed a decrease of 0 5%, falling to 42 6% in Q4:2022 from Q3:2022 As per the survey, the country acquired 169,000 jobs during the period from Q3:2022 to Q4:2022, with a total of 15 9-million individuals being employed in Q4:2022

While these latest results are encouraging, one has to wonder whether or not these positive levels are sustainable given the current state of the SA economy

What the SA economy looks like at this point in 2023

At the end of January, PwC released its first South Africa Economic Outlook Report for 2023 which details a number of their analyses

According to PWC s baseline scenario, the rand is predicted to have an average of R16 90/$ this year, in contrast to the mean of R16 37/$ in 2022

The rand is highly vulner- able to external factors and tends to be unstable This year, political divisions in Washington, DC and local policy changes pose risks to the currency

Additionally, high inflation and rising energy costs on a global scale could cause social unrest and political instability, which decreases interest in emerging market assets such as the rand

Also at the end of January, the SA Reserve Bank made a revision to the country s GDP growth projection for 2023, reducing the forecast to a mere 0 3% for the year

The Bank has lowered its 2024 and 2025 projections as well, to 0 7% (from 1 4%) and 1 0% (from 1 5%), respectively, by a significant margin

On March 6, GDP figures plummeted to levels last seen in the third quarter of 2021 The next day, Stats SA released figures showing a decline in the fourth quarter

The central bank attribut- ed the downward revision to the severity and prolonged nature of load-shedding in the country, stating that rolling blackouts have caused a two percentage point decline in the annual growth projection

Even though R5bn worth of solar panels were imported into the country in 2022, up from about R4bn the year before, this could be too much too late as the cost of these back-up energy solutions remains prohibitive

The impact on the employment will be felt especially in the domestic sector with minimum wage increases well above inflation

THE BANK MADE A REVISION TO SA’S GDP GROWTH PROJECTION FOR 2023, REDUCING THE FORECAST TO

Given this economic backdrop will unemployment rates continue to fall?

Ultimately, it will depend on the size and nature of the business And, more importantly, whether or not their customers still have the where-with-all to purchase from them

The latest liquidation figures for SA, released by Stats SA, don t look good These indicate that company liquidations increased by more than 30% year on year in December 2022, although the overall number of closures for the entire year was slightly lower than the previous year Stats SA reported that there were 159 liquidations in December 2022, a rise of 30 3% compared to December 2021

The outlook for job growth looks grim and, unfortunately, the predictions could well be that in 2023 the economy will continue to lose jobs Hopefully this does not turn out to be the case