More economic woes for South Africa as jobless rate hits 30%

South Africa’s unemployment rate has increased to 30% as the country continues to battle the biggest Covid-19 outbreak on the continent. The hard lockdown which began in March is a contributing factor, but Africa’s most industrialised economy entered the year in recession, received a credit rating downgrade to junk status and has seen low economic growth for nearly a decade. 

Today’s unemployment figures only reflect the first three months of the year, before the country went into lockdown, so the real jobless rate will probably be much worse once quarter 2 results are released later this year. Those figures will provide the true reflection of the jobs bloodbath caused by the Covid-19 pandemic. 

But looking at these pre-Covid-19 jobless numbers, South Africa’s downward economic spiral is clear. For the first quarter of this year nearly 350 000 people joined the ranks of the unemployed, which now means there are over 7 million people without work in the country.

Most sectors of the economy suffered job losses, the worst affected included; banking, community services and agriculture, which saw losses of 50 000, 33 000 and 21 000 respectively. 

Since the lockdown began on March 26, economic activity has been restricted resulting in numerous job losses across the board. National treasury projects that up to 1.8 million jobs could be lost as result of the pandemic, and the country could see the unemployment rate reach 50 % in a worst-case scenario.

The only comfort South Africa can take from this is the entire world is undergoing economic upheaval of some sorts. According to World Bank projections, the global economy is set to contract by as much as 5.2 % due to the coronavirus. 

However the country’s economic contraction is set to outpace the global rate. Tomorrow finance minister Tito Mboweni will also be the bearer of bad news when he tables his supplementary budget. Mr Mboweni is expected to announce the country’s biggest budget deficit on record along with a massive decline of economic growth.

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