87000 more jobs lost

The unemployment rate in South Africa, the highest of more than 40 emerging markets tracked by Bloomberg, increased to 25.5% in the second quarter as factories and mines shed jobs.

The rate rose from 25.2% in the previous three months, Statistics South Africa said yesterday.

The number of people without jobs surged by 87000 to 5.2million, it said.

The country has been struggling to rein in unemployment since the 2009 recession and a series of strikes this year has undermined economic expansion, prompting the Reserve Bank to lower this year's growth forecast.

The government estimates it needs growth of 5.4% to cut the jobless rate to 14% by 2020.

"The inability of the South African economy to create employment in the private sector remains acute," BNP Paribas Cadiz economist Jeffrey Schultz said.

Mining and manufacturing job losses were indicative of an environment in which many productive sectors of the economy grappled with strikes and above-inflation wage increases, he said.

The five-month stoppage at platinum mines caused output of the precious metal to plunge in the first quarter.

The head of Statistics SA, Pali Lehohla, said it was difficult to say whether employment had declined as a consequence of big wage increases.

"Theory says that people tend to mechanise if the cost of labour is high, so they become capital-intensive."

Manufacturers shed 60000 jobs in the quarter, while employment in mining fell by 5000 jobs, the statistics office said.

Jobs in farming fell by 39000, construction dropped by 18000 and financial services by 34000 positions.

Employment rose in just two of the eight industries measured, surging by 103000 jobs in the community and social services sector, which includes government workers.

Nedbank economists said that the unemployment rate was likely to remain high in the short term given weak domestic demand, rising input costs, frequent labour disputes, significant infrastructure constraints and regulatory issues in key sectors.