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The Quarterly Labour Force Survey: 2.2mn jobs lost in 2Q20

29 September 2020

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by Peter Little, Fund Management

South Africa’s (SA’s) 2Q20 Quarterly Labour Force Survey (QLFS), which Statistics SA had to delay twice because of the COVID-19 pandemic, was finally released on Tuesday (29 September). According to the latest QLFS, SA’s official unemployment rate dropped from 30.1% in 1Q20 to 23.3% in 2Q20 (vs consensus economist expectations of an increase to 34.9% and the lowest level recorded since 3Q09).

Unfortunately, this drop in the unemployment rate does not mean that more people gained employment during the quarter. On the contrary, 2.2mn jobs were lost in 2Q20 (representing c. 14% of all jobs at the start of the quarter). The drop in the unemployment rate was purely a function of a decline in who Stats SA considers to constitute the labour force. In calculating the labour force, Stats SA starts with the SA population aged 15–64 years old (c. 40mn) and subtracts from that number the discouraged work seekers (i.e. those people who have given up on trying to find a job – c. 2.5mn people) and other not economically active (NEA) people. The data reflect a huge jump in the NEA category (from c. 12.5mn in 1Q20 to c. 18mn in 2Q20) and it is that jump which shrunk the labour force and made the ratio of unemployed people relative to the labour force drop. The NEA category consists of students, homemakers, those too old/young to work or those not working because of illness/disability – none of those categories saw significant changes during the course of 2Q20. Instead, it was the “other” category which jumped by 5mn people, presumably not economically active because of the lockdown, which had the biggest impact on the unemployment rate.

The period under review accounted for most of the hard lockdown months and the worst impact of the pandemic (level-1 lockdown started on 26 March and the hard lockdown, which halted most economic activities, lasted from 26 March until June).

If we normalise these numbers by adding back the 5mn additional NEA people to the labour force it would imply a 39.7% unemployment rate. In addition, 13% of all employees lost their jobs in 2Q20. The expanded unemployment rate, which includes non-economically active members, rose to 63.74% from 57.86%.

In terms of the lockdown’s impact on employment, we highlight the following:

  • 5mn people left the labour force.
  • 2mn jobs were lost.
  • The construction industry was the hardest hit percentage wise, with a 20% YoY decline in employment to 297,000 jobs.
  • Trade recorded the largest number of job losses with 482,000 or 11.2% of people losing their jobs.
  • No sector saw an increase in jobs.
  • 5mn employed people received salaries during the lockdown, while one in five people reported a reduction in their salaries during the period under review.
  • The expanded unemployment rate rose in all SA provinces except in the Free State, where it declined by 3.3 ppts.
  • Young workers were impacted worst with 32% losing their jobs, and 42% leaving the workforce.
  • The 15-34-year-old employment category accounted for nearly 3mn in lost workforce, and 1mn in jobs lost.
  • It is shocking to think that two out of every three people of working age in SA are now unemployed.

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