Africa-Press – South-Africa. South Africa’s economy is not creating enough jobs to absorb thousands of new entrants to the labour market, resulting in unemployment consistently rising.
More worryingly, South Africa’s graduate unemployment rate continues to climb, indicating that even skilled individuals cannot find jobs in the local economy.
The country’s population growth of around 1.4% and relatively young citizenry means that around 600,000 people enter the workforce every year.
Even during the period of strong economic growth in South Africa during the mid-2000s, the economy did not create enough jobs to absorb that number of new entrants.
In the second quarter of 2025, South Africa’s total employment increased by 19,000, driven by the manufacturing, finance, and retail sectors, the Reserve Bank flagged in its latest Quarterly Bulletin.
The year-on-year pace of increase in total household-surveyed employment accelerated sharply from 43,000 (0.3%) in the first quarter of 2025 to 154,000 (0.9%) in the second quarter.
Nevertheless, this increase remained considerably smaller than the increase of 306,000 (1.9%) recorded in the second quarter of 2024, the Reserve Bank said.
While this sounds promising, when the growth of South Africa’s labour force is taken into consideration, it is not enough to reduce unemployment.
South Africa’s total labour force increased to 25.2 million in the second quarter of 2025 as the number of officially unemployed persons and the total number of employed persons increased by 140,000 and 19,000, respectively.
Consequently, the official unemployment rate increased further from 32.9% in the first quarter of 2025 to 33.2% in the second quarter.
The Reserve Bank’s analysis showed that a large share of the increase in unemployment was driven by new entrants to the labour market who could not find jobs.
This is primarily young adults coming out of university or school who cannot enter the formal economy due to a lack of growth. These individuals risk not participating in South Africa’s economy or having a stake in the wealth it generates.
The total number of officially unemployed persons in the second quarter of 2025 primarily comprised new entrants to the labour market (43.2%) followed by job losers (25.8%) and persons who last worked five years ago (24.9%), the Reserve Bank said.
Worryingly, the graduate unemployment rate increased further from 11.7% in the first quarter of 2025 to 12.2% in the second quarter.
South Africa’s unemployment rate over the past five years can be seen in the graph below.
Worse than it seems
South Africa has been unable to return its employment rate to the levels seen pre-pandemic, with businesses and the government unwilling to invest in expansion and employment due to a stagnant economy.
The country’s unemployment crisis also appears to be more entrenched than initially expected, following a quick rebound in economic activity after the end of the pandemic.
After plummeting during the pandemic, formal non-agricultural employment has failed to return to the level seen in 2019.
Economists typically look at non-agricultural employment as an indicator of the overall health of the labour market, as agricultural employment tends to be highly seasonal.
This figure, according to the Reserve Bank, dropped from over 11.2 million employed individuals in 2019 to around 10.5 million and has not recovered since.
The decline in employment from the private sector is the main driver of this, with companies unwilling to invest in a stagnant economy.
Many are instead letting their cash accumulate interest in money market funds or call accounts, waiting for better opportunities and greater confidence in the economy.
The private sector employed 7,300 fewer people in the first quarter of 2025, resulting in a further decrease in the level of such employment to 8.32 million, nearly matching the pandemic-induced low of 8.29 million in the second quarter of 2020.
Firms have remained largely cautious about expanding employment amid heightened global economic and geopolitical uncertainty as well as subdued domestic economic activity, the Reserve Bank said.
Broad-based job losses were recorded across the private subsectors, except for the finance, insurance, real estate and business services sector, which recorded employment gains in the first quarter of 2025.
The sharp declines in formal employment and the private sector, , which have been sustained over the past five years, can be seen in the graphs below.
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