Unemployment reaches record high

by Raymond Parsons: Professor at the NWU School of Business & Governance and a former special policy adviser to Busa.
A new record high (34.4%) in the SA unemployment rate in the second quarter of 2021 confirms the destructive impact which the Delta variant and accompanying lockdown restrictions have had on the economy and the labour market. The outlook for the job market remains weak, as it is clear the full impact on economic activity of the civil unrest in late July will only become apparent in the third quarter of 2021. The total economic costs of the recent violence and civil unrest have not yet fully emerged.

In these negative circumstances, unemployment is now indeed the ‘cruellest tax’ on vulnerable sectors of the population and job creation continues to demand top priority. There is, however, no ‘quick fix’. Given the current uncertainties in the economic outlook, the immediate overall job situation is therefore likely to get worse before it gets better. The latest unemployment figures nonetheless send a renewed message that the balance between lives and livelihoods in handling the pandemic remains an acute dilemma which needs to be carefully managed in the period ahead.

Existing job support measures must in the meantime be intensified. The unemployment situation injects urgency into the implementation of the various important existing short term economic support measures, so as to offset to some extent the hardships being experienced by companies and workers who have been economically badly hit. It also highlights the importance of expediting the vaccination program to speed up economic recovery.

Above all, as the bulk of future job creation must come from the private sector, the business-friendly environment required for private fixed investment to flourish needs to be expedited. The latest statistics show private capital formation remains at a low ebb and is currently inadequate to support the much higher growth that SA needs. To get the SA economy onto a far higher job-rich growth path now needs a sense of urgency and consistency in implementing the right remedies and reforms required to rebuild business confidence and boost investment.

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