Unemployment is a multifaceted and significant challenge in South Africa, not only impacting individuals and families, but also the overall progress of the country. Unfortunately, South Africa currently holds the highest unemployment rate globally. In the first quarter of 2023, the unemployment rate reached 32.9%, indicating a 0.2 percentage point increase compared to the previous quarter. Particularly concerning is the remarkably high youth unemployment rate of 46.5% in this same quarter. Despite collaborative efforts of government, NGOs, and the private sector to tackle this issue, the challenge persists.
Between 2017 and 2019, the number of unemployed individuals increased by 31%, and this trend continued in the period from 2020 to 2022. The highest proportion of unemployed between 2020 and 2022 were new entrants, accounting for 46%, followed by job losers at 26%, and individuals who are unemployed due to other reasons at 22%. It is worth noting that during this later period, more people entered the labour force while simultaneously facing job losses due to the impact of the Covid-19 pandemic.
The high percentage of new entrants among the unemployed may be attributed to factors such as a lack of education or a skills mismatch, acting as barriers to their entry into the job market and hindering employment prospects. Furthermore, the relatively high percentage of job losers, at 26%, highlights a concerning trend of job instability and a prevalence of short-term employment. The scarcity of permanent positions creates challenges for re-entrants in securing stable employment, resulting in a higher reliance on temporary arrangements that are not sustainable in the long run. Interestingly, when comparing the proportions of unemployment among re-entrants and job leavers to three years ago, we observe a decline. This suggests that job security has not been guaranteed after the Covid-19 pandemic, making voluntary job transitions less viable unless individuals are pursuing better opportunities elsewhere. Additionally, the percentage of unemployed individuals due to other reasons also showed an increase during the periods from 2017 - 2019 and 2020 to 2022.
The Covid-19 pandemic has had a profound impact on industry dynamics and employment in South Africa. The trade sector, which saw a decline of 2.2%, has been particularly affected. This sector relies heavily on labour-intensive and onsite work, and the restrictions imposed during the pandemic severely hampered its operations. Similarly, the construction, manufacturing, agriculture, and mining sectors also experienced job losses, with declines of 1.5%, 0.9%, 0.4%, and 0.2%respectively. The challenges faced by these industries were exacerbated by limited economies of scale in labor costs and disruptions in the supply chain. As projects came to a standstill and businesses struggled to recover, unemployment rates in these sectors increased. On the other hand, despite reduced demand for service-based jobs in industries like tourism and hospitality due to Covid-19 restrictions, certain sectors witnessed an increase in industry participation among the unemployed. The community and social services sector, which saw a significant growth of 2.9%, reflects the rising demand for essential social services. Additionally, the transport, finance, private household, and other sectors experienced modest increases in industry participation. These shifts in industry participation highlight the complex and evolving nature of the job market in the wake of the pandemic. While some sectors faced significant challenges, others managed to adapt and find new opportunities for growth. Understanding these trends is crucial in formulating strategies to support job creation and recovery efforts.
The graph below illustrates the changes in previous occupations of unemployed individuals in South Africa between 2017-2019 and 2020-2022. The pandemic affected sectors and occupations differently, resulting in new skills needs and demands. Currently, the labour market in South Africa is predominantly composed of semi-skilled workers, accounting for 52% of employees. Surprisingly, during the pandemic, there was an increase in the number of semi-skilled workers in sales occupations by 1.4% and in clerical occupations by 0.9%. These occupations, which require human interaction, were impacted as businesses shifted to remote working arrangements.
The world is constantly evolving and so is the job market which is undergoing transformations. According to World Economic Forum’s(WEF) 2023, the Future of Jobs report states that “the decline of certain roles between now and 2027 will happen as a result of technology and digitalisation”. Digitalisation in the workplace creates new opportunities which enables the new forms of work, such as remote working to provide more flexibility. However, it also puts people’s jobs at risk in that jobs previously performed by humans are now being performed by machines. The report mentions that with more companies looking to adopt technologies, such as Artificial Intelligence, cloud computing and big data, the impact on the relevance of certain jobs such as those of clerks, secretaries, bank tellers, have come under threat. The fastest-growing roles today include AI and machine learning specialists, sustainability specialists, business intelligence analysts and information security analysts, according to the report. There is a skills gap in the current labour market and therefore an urgent need for upskilling of employees. In the next five years, approximately six of ten workers will need upskilling to keep up with this rapid transformation. In terms of sectors growth, a large-scale jobs growth is expected in the energy sector (with transitioning towards renewable energy), education, agriculture, and digital commerce. The new technologies may drive future growth across all of the industries which may increase the demand for new job roles and skill sets. The reality is that some of the technological adaptations will impact workers’ jobs by displacing some tasks performed by humans into that performed by machines. The extent of disruption may vary depending on the nature of the work and requisite skills.
The impact on the workforce and job roles cannot be understated. Technology and automation are reshaping industries, presenting both challenges and opportunities. Ascertain tasks become automated, we must strive to strike a balance between technological advancements and the preservation of human employment. This requires a forward-thinking approach, focusing on the development of skills that are uniquely human, such as creativity, critical thinking, and emotional intelligence. By harnessing our inherent strengths, we can build a workforce that thrives in the face of technological disruption.
Looking towards the future, we must embrace the transformative power of innovation and adaptability. The World Economic Forum's Future of Jobs report indicates that new roles will emerge, while others may decline. By equipping ourselves with the skills necessary for the jobs of tomorrow, we position ourselves at the forefront of opportunity. The energy sector, education, agriculture, and digital commerce are projected to experience substantial growth, providing avenues for job creation and economic prosperity.
The Covid-19 pandemic has had a significant impact on South Africa's labor market, leading to a rise in unemployment and shifting industry dynamics. Between 2017 and 2019, the number of unemployed individuals increased by 31%, and this trend persisted from 2020 to 2022. The highest proportion of the unemployed consists of new entrants(46%), followed by job losers (26%), and individuals who lost jobs due to other reasons (22%). This influx of new entrants may be attributed to barriers such as lack of education or skills mismatch, hindering their entry into the job market.
Industries like trade, construction, manufacturing, agriculture, and mining experienced job losses due to pandemic-induced restrictions and disruptions in the supply chain. However, certain sectors, such as community and social services, saw growth due to the rising demand for essential social services. The job market has also seen an increase in the number of semi-skilled workers in sales and clerical occupations.
The future of jobs will be shaped by technology and automation, with some roles declining and others emerging. Upskilling of employees will be crucial to bridge the skills gap and adapt to the changing landscape. Sectors like energy, education, agriculture, and digital commerce are expected to experience significant growth, offering opportunities for job creation.
As we navigate the impact of technological advancements on the workforce, it is essential to strike a balance between embracing innovation and preserving human employment. Embracing adaptability and new opportunities will be key to thriving in the changing job market. It is crucial to prioritize initiatives that bridge the education and skills gap, foster long-term job creation, and ensure a supportive environment for all individuals to thrive in the labor market.
These insights shed light on the complex dynamics of unemployment in South Africa and underscore the need for comprehensive strategies to address the challenges faced by job seekers and enhance the sustainability of employment opportunities. By understanding the complexities of unemployment and its underlying factors, we can work collectively to implement effective solutions that promote inclusive growth, reduce unemployment rates, and create a brighter future for all South Africans.
Produced by The Durban EDGE Team of the
Economic Development Unit of eThekwini Municipality
in partnership with Human Sciences Research Council
For more information, contact edge@durban.gov.za
