In the second quarter of 2025, unemployment edged up to 33.2% in the second quarter of 2025 from 32.9% in the previous quarter, while of the 10.1 million people aged 15 to 24, 35.2% were not in employment
South Africa’s unemployment rate is one of the highest in the world.
In the first three months of this year, South Africa recorded a retreat in unemployment for the first time since the last quarter of 2018. Next week, Statistics South Africa’s quarterly labour force survey will show whether the jobless level has continued to fall from the record heights it hit recently.
But, even if another retreat is on the cards, experts say the unemployment rate is unlikely to record a significant decline for many years to come.
South Africa’s official unemployment rate — which is the most conservative measure of the depth of the country’s jobs crisis, failing to take into account the large number of people who have given up on finding work — has been in the double digits since at least 2008.
Between the last quarter of that year and the last quarter of 2021, the number of South Africans without jobs almost doubled from four million to 7.9-million.
The structural problems
On a list of 183 countries, compiled by Trading Economics using the most recent official data, South Africa’s unemployment rate is the highest at 34.5%. The country’s real unemployment rate is far higher, at 45.5%.
South Africa’s jobs crisis has coincided with the country’s stagnant economic growth and low investment, which has also lasted for about a decade.
Momentum economist Sanisha Packirisamy said the unemployment rate should be broken down into two components: cyclical unemployment, which is affected by low economic growth, and structural unemployment, which affected by longer-term systemic obstacles in the economy.
“As our economy shifted from being a goods to services-oriented economy, we didn’t see the same shift in the labour market. A lot of our workers are still equipped to be in the unskilled or semi-skilled job force. But we actually need workers in the skilled labour force to match what economic activity looks like these days. That is the structural unemployment that we speak about,” Packirisamy explained.
“It is possible to see a dip in the unemployment rate on a cyclical basis, when the economy does well, GDP is high and businesses are investing more and hiring more employees. But we will never get past that point, because of structural unemployment … So I think from that perspective, we will always have a high unemployment rate, unless we start to see policies in that direction unfolding.”
No significant decline soon
Hugo Pienaar, the chief economist at the Bureau for Economic Research, agreed that it is unlikely South Africa’s unemployment rate will record a significant decline in the near future.
“The best that one could hope for is that we will gradually start to eat into that very high rate. In other words, it starts to move lower over time,” Pienaar said.
“But, given how high it is now, even if you make substantial progress — like cutting the unemployment rate by 10% — you are still going to be sitting with an unemployment rate of almost 25% on the official definition. And I don’t think there is anybody that thinks that we will push that rate down by 10% over the next five years or so.”
In the second quarter of 2020, deemed “the pandemic quarter” by StatsSA, the country experienced the steepest decline in the number of employed people since 2008, with over 2.2-million jobs lost. In 2009, in the wake of the global financial crisis, employment fell by less than half of that, with 870 000 fewer jobs in the economy.
Jobs have since been added to the economy, but the number of employed people is still well below pre-pandemic levels.
In fact, in the decade prior to the pandemic, the number of employed people had steadily been increasing. But employment growth did not keep pace with the growth in the labour force, hence the higher rates of unemployment.
Since the pandemic quarter, the labour force has inched closer to the size it was before Covid-19, but job recovery has proven more elusive. This is despite economic recovery. In the first quarter of this year, the size of the economy returned to pre-Covid levels, with real GDP slightly higher than what it was before the pandemic.
Pienaar noted that the lag in employment, compared with GDP recovery, is partly the result of continued economic uncertainty among investors.
“Companies have seen demand coming back for their goods, but how sustainable is it given the shocks we have seen the last couple of years? So I think that they have kind of waited to see whether we have a sustainable environment here before employing more people … The economy will probably need to grow for consecutive years of 3% plus before we really see employment growing.”
Magic bullet
Haroon Bhorat, professor of economics and director of the Development Policy Research Unit at the University of Cape Town, pointed out that South Africa’s employment elasticity — the percentage change in employment associated with a 1% increase in GDP — is not unusually low.
For a 1% increase in GDP, there is about a 0.7% increase in employment. “That turns out not to be that bad compared to other middle-income countries,” Bhorat noted.
But South Africa’s unemployment rate is significantly higher compared with these countries, including Costa Rica, Columbia and Brazil. The key reason for this, Bhorat said, is that the rates of informality in these countries are far higher.
“The reason we have very high rates of unemployment is not principally due to the standard constraints on economic growth, which we regularly consider in policy debates — but rather due to the fact that we have a very low proportion of the labour force in the informal sector. South Africa’s rate of informality is one of the lowest in a sample of comparator economies.”
For this reason, reducing the barriers to entry into the informal sector will dramatically reduce the unemployment rate, Bhorat said.
Policy interventions to boost employment, in both the formal and informal sectors, will take time.
“You have to at least not discourage labour-intensive economic growth. Because that is going to give you larger numbers of formal-sector employment, which is very important to structurally transform the economy,” Bhorat said.
“But in the interim — while you try and do that, and encourage investment, keep the exchange rate stable and lower interest rates and create incentives and so on — you better make sure you’re not you’re not dissuading, or violent discouraging, the vulnerable from finding some piece of the economic pie through the informal sector.
“We are clearly not thinking creatively about encouraging the informal sector in South Africa. Growing the informal sector is the closest we have to a magic bullet to reducing our unemployment rates.”
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