HomeWorld BusinessS.Africa's unemployment high, key sectors struggle

S.Africa's unemployment high, key sectors struggle


PRETORIA- South Africa’s unemployment rate slowed slightly in the second quarter but remained high, official data showed on Tuesday, with key sectors like manufacturing still shedding jobs as the global economic downturn hits domestic output.

The unemployment rate was marginally lower at 24.9 percent of the labour force in the in the three months to June from 25.2 percent in the first quarter, with news jobs created in the formal sector, Statistics South Africa said.

But manufacturing, which contributes about 15 percent to the gross domestic product, shed 44,000 jobs during the quarter, attesting to the struggle businesses face from waning growth in Europe, South Africa’s main trading partner.

The total number of unemployed people dipped to 4.47 million from 4.5 million in the first quarter, Stats S.A. said in its latest quarterly Labour Force Survey.

The expanded definition of unemployment, which includes people who have stopped looking for work, also eased to 36.2 percent from 36.6 percent.

The official jobless rate however remains too high and there is little prospect of a substantial reduction while domestic growth remains a slave to the global economy, said Colen Garrow, an independent economist at Meganomics.

The Reserve Bank cut its benchmark interest rate to a 40-year low of 5.0 percent earlier this month to try and boost growth but still lowered its 2012 GDP forecast to 2.7 percent — in line with the Treasury — from the 2.9 percent seen in May.

“The sectors that create employment the most are probably going to be those still battling – mining and manufacturing in particular,” Garrow said, adding that inflexible labour legislation was also a hindrance.

President Jacob Zuma’s government is proposing changes to labour laws aimed at increasing job security for temporary workers but economists say this will worsen unemployment as it ramps up costs for employers.

“In a nutshell it’s not a good outlook for the labour market for quite some time,” said Garrow.

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