Lockdown batters job market as SA sheds 2.2m in quarter 2 of 2020

SA saw 2.2 million job losses in the second quarter of 2020 during the worst of the hard Covid-19 lockdown, Stats SA data showed on Tuesday.

But despite the dramatic decline in the number of working people, SA’s unemployment rate fell to 23.3% in the second quarter of the year, from 30.1 in the first quarter, according to Stats SA’s quarterly labour force survey (QLFS).

The decrease in the official rate, however, was driven by the inability of people to actively seek work during lockdown, resulting in an increased number of people being categorised as “not economically active” in the second quarter.

“This sharp fall in the unemployment rate ... is not a reflection of an improvement in the labour market but rather an effect of the national lockdown, since the official definition of unemployment requires that people look for work and are available for work,” Stats SA said.

“In essence, the national lockdown hindered people from looking for work, so this significant decline in unemployment while employment is declining, is inherent in the official definition of unemployment.”

The number of not economically active people – which typically includes students, homemakers and those who are too sick to work – rose by a net 5.2 million in the second quarter, taking it to 20.6 million, or a 33.4% increase.

A similar phenomenon has been observed in other parts of the world where there has been a greater increase in inactivity than unemployment in the labour market, said statistician-general Risenga Maluleke

During the first three months of 2020 before coronavirus struck, unemployment reached 30.1%, the highest level since the QLFS began in 2008.

Using the expanded definition, which includes discouraged work seekers or people who have given up looking for a job, unemployment rose to 42% in the second quarter.

The outcome was better than economists’ expectation of 34.9%, according a Bloomberg poll of 10 economists.

During the second quarter SA experienced a 51% annualised and seasonally adjusted GDP contraction, the worst contraction since quarterly records began in 1960.

The sharp downturn in quarter two led the SA Reserve Bank to revise its forecasts for the full year to a contraction of 8.2%, although some private-sector estimates suggest that figure could be closer to 10%.

According to Stats SA, job losses were experienced across all industries, with the hardest hit being community and social services and trade.

Though the latest QLFS reflects the months from April to June, which included the severest lockdown (level 5), the economy operated under various stages of restriction well into September, when it finally moved to level 1.

The full unemployment picture is, however, yet to emerge as the economy reopens and businesses gauge the level of recovery.

The Stats SA data comes out ahead of the release of the second wave of the National Income Dynamics Study – Coronavirus Rapid Mobile Survey.

The first wave of the study – by a consortium of 30 social science researchers from five SA universities – indicated that about 3 million people lost their jobs between February and April.

The initial round also highlighted that job losses were disproportionately concentrated among already vulnerable groups in the labour market such as women, manual workers, people in lower-income households, and workers in the informal sector.

The second wave due out on Wednesday is expected to provide insight into whether any of the 3 million jobs lost have been recovered between April and June and whether hunger levels among households have improved.