South Africa’s unemployment rate rose for the first time in more than a year as more people started to look for work, and it may continue climbing with power cuts intensifying, discouraging investment and sapping economic growth.
(Bloomberg) — South Africa’s unemployment rate rose for the first time in more than a year as more people started to look for work, and it may continue climbing with power cuts intensifying, discouraging investment and sapping economic growth.
The official jobless rate jumped to 32.9% in the three months through March from 32.7% in the prior quarter, Statistics South Africa said Tuesday in a report released in the capital, Pretoria. That’s the first increase since the fourth quarter of 2021. The median estimate of five economists in a Bloomberg survey was 33%.
While the number of employed people increased by 258,000 in the quarter, boosted by job gains in the finance and community and social services sector, those looking for work swelled by 437,000 as school leavers, graduates and previously discouraged work-seekers started hunting for jobs. That contributed to the expanded definition of the unemployment rate, which includes people who were available for work but not looking for a job, declining to 42.4% compared with 42.6% in the December quarter.
The worst bout of power rationing yet, with outages this year already exceeding those for all of 2022, may further increase South Africa’s unemployment rate.
State electricity utility Eskom Holdings SOC Ltd. isn’t able to meet demand due to its aging power plants, years of corruption and some reported acts of sabotage. It has implemented so-called loadshedding, the South African term for rolling blackouts, every day this year bar one.
The power cuts have caused the cost of doing business to surge and led to reduced trading hours. The Foschini Group Ltd., a South African fashion retailer, said annual sales fell by more than 1.5 billion rand ($78.7 million) in the year through March as the outages caused it to lose about 360,000 trading hours and curbed customer demand.
Vodacom Group Ltd. has spent 4 billion rand in back-up power equipment such as batteries and generators since 2020, and 300 million rand this year on additional diesel, maintenance and security of its sites, the mobile operator’s Chief Executive Officer Shameel Joosub said on Monday.
Economic Cost
The central bank estimates that power cuts are costing the economy as much as 899 million rand a day and will shave 2 percentage points off GDP growth this year, adding to other pressures, such as high inflation, logistic constraints, rand depreciation and rising interest rates.
Governor Lesetja Kganyago last week urged the government to remain committed to implementing structural reform measures, especially in logistics and electricity, that will unlock South Africa’s growth potential and reduce unemployment.
–With assistance from Rene Vollgraaff.
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