South Africa’s upcoming employment figures are expected to reflect unfavourable trends, according to economists who caution that continued economic underperformance and a surge of new graduates entering the labour market may contribute to a worsening situation. These challenges are set to compound an already strained economic environment, potentially leading to a noticeable decline in overall employment levels.
Key Takeaways
- Rising Unemployment Expected in Q1 2025: Economists anticipate that South Africa’s unemployment rate will climb again due to a sluggish economy, the end of seasonal jobs, and a large influx of new graduates entering the workforce.
- Growth Projections Revised Down: South Africa’s GDP growth for 2025 is now expected to fall between 1% and 1.5%, barely keeping up with population growth, which suggests worsening per capita income and limited improvement in living standards.
- External Trade Risks Threaten Jobs: The potential loss of AGOA benefits with the US could jeopardise thousands of jobs in agriculture and automotive sectors, intensifying pressure on an already fragile labour market.
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Anticipated Release of the Quarterly Labour Force Survey
Statistics South Africa (Stats SA) is preparing to release the latest edition of the Quarterly Labour Force Survey (QLFS) next week, which will provide detailed insights into the country’s employment status for the first quarter of 2025. The release is being closely watched by analysts and policymakers, as it may confirm fears of a reversal in recent employment gains. The data could reveal the extent to which economic stagnation is eroding job security, further exposing structural weaknesses in the country’s labour absorption capacity.
The most recent QLFS, which covered the final quarter of 2024, indicated a marginal improvement in the labour market. These gains were largely attributed to short-term seasonal employment during the festive period. The report showed an increase of 132,000 employed individuals, bringing the total number of employed persons in the country to approximately 17.1 million during Q4 2024. However, many of these jobs were temporary retail and logistics positions that typically evaporate after the holiday season, offering little long-term relief to South Africa’s unemployment crisis.
Unemployment Rate Declined Slightly in Previous Quarter
Thanks to this temporary rise in employment, the official unemployment rate declined by 0.2 percentage points, moving from 32.1% in the third quarter of 2024 to 31.9% in the final quarter. This minor improvement, however, may not be sustainable heading into 2025, as underlying structural issues remain unresolved. Youth unemployment remains dangerously high, with millions of South Africans under 35 unable to access formal employment opportunities.
Expectations of Rising Unemployment in Q1 2025
Economic analysts are increasingly warning of a likely deterioration in employment levels during the first quarter of 2025. The Bureau for Economic Research (BER) has noted that this period traditionally coincides with a large influx of school-leavers and university graduates entering the job market. Unfortunately, many of the temporary jobs created during the holiday season are simultaneously phased out during this time. This perfect storm of job losses and labour market entries typically triggers a sharp spike in the unemployment rate, exposing the system’s inability to absorb young, first-time job seekers.
According to Nedbank economists, the already sluggish economy is ill-equipped to absorb the growing labour force, especially as structural weaknesses across key sectors persist. This mismatch between workforce expansion and job creation capacity is expected to place additional upward pressure on the unemployment rate during early 2025.
Even skilled graduates are struggling to secure entry-level jobs, with employers citing limited growth, low productivity, and regulatory uncertainty as barriers to hiring.
Deteriorating Economic Conditions Cloud Job Prospects
With output from major sectors such as manufacturing and mining projected to remain subdued, prospects for significant job creation in the short term appear bleak. Analysts highlight that these sectors—once engines of employment—are now contributing to economic fragility due to ongoing production constraints and operational challenges. The manufacturing sector, in particular, has faced persistent electricity disruptions, high logistics costs, and weakening domestic demand—all of which have paralysed its ability to expand operations and recruit new workers.
Rising Global and Domestic Uncertainty Weighs on Business Confidence
Nedbank’s commentary further reflects concern over increasing uncertainty caused by a spike in global trade tensions, notably the rise in United States tariffs, and internal political friction within the Government of National Unity (GNU). These developments are likely to make South African businesses more cautious, encouraging a wait-and-see approach instead of pursuing immediate investment or expansion plans.
South Africa’s Economy Must Grow to Create Jobs
The South African economy is in urgent need of sustained, inclusive growth to support job creation at scale. However, recent efforts have yielded limited progress. President Cyril Ramaphosa recently launched Phase 2 of Operation Vulindlela, an ambitious reform programme designed to steer the country toward an annual growth rate exceeding 3% by 2030. While the programme has potential, it is not without its challenges.
Reform Ambitions Clashing with Implementation Realities
Economists from the BER have raised concerns about the practical feasibility of the programme’s goals, especially considering that many of the reforms initiated under Phase 1 remain incomplete. Rather than streamlining the agenda, new initiatives have been added to an already burdened reform pipeline, making successful implementation increasingly difficult.
Growth Projections Revised Down for 2025 and 2026
Even under the assumption of flawless execution in a disruption-free environment, reaching a consistent 3% growth target remains highly optimistic. The reality on the ground, however, suggests otherwise. Growth expectations for South Africa in both 2025 and 2026 have already been scaled back significantly. Current forecasts suggest that gross domestic product (GDP) growth will fall between 1% and 1.5%—barely keeping pace with population growth rates. This means that, on a per-person basis, South Africans are seeing little to no improvement in living standards, with many slipping further into poverty.
GDP Per Capita Is Stagnating or Declining
In per capita terms, the stagnant economic performance implies that the average South African is either no better off than before or increasingly worse off. This trend reinforces the urgency of addressing growth constraints, particularly in high-potential sectors like mining and manufacturing, which are either underperforming or in outright recession. With consumer confidence at rock bottom and real wages under pressure, the broader economy lacks the momentum required to create sustainable employment.
External Trade Risks Threaten Key Employment Sectors
In addition to domestic challenges, South Africa faces increasing external pressure. Global trade prospects have been dampened by the United States’ renewed emphasis on protectionist policies, with the Trump administration pushing back against trade deficits. This stance places South Africa’s preferential access to US markets—under the African Growth and Opportunity Act (AGOA)—at serious risk. South Africa’s eligibility under AGOA is currently under review, and any suspension could instantly destabilise entire value chains tied to US export markets.
Thousands of Jobs at Stake in Export-Dependent Industries
Losing AGOA benefits could have a devastating impact on employment in key export-driven sectors such as agriculture and automotive manufacturing. Thousands of jobs currently supported by US-bound trade would be jeopardised if the trade agreement is revoked or restricted. Sectors such as citrus, nuts, wine, and vehicle assembly—already battling input cost inflation—could see mass retrenchments if duty-free access to the US ends.
Urgent Calls to Diversify Trade and Accelerate Reform
Economists have urged the South African government to act decisively to soften the impact of possible trade fallout. This includes pursuing broader international trade partnerships and reducing overreliance on a few markets. Moreover, there have been repeated calls for stronger, more consistent implementation of structural reforms aimed at enabling growth and expanding employment opportunities across all sectors of the economy. Without decisive action, the country risks entering a prolonged period of low growth, high unemployment, and rising inequality, with little room to manoeuvre in a volatile global landscape.
Conclusion
South Africa is facing a convergence of economic and structural challenges that are likely to worsen employment conditions in the short term. With weak GDP growth, a labour market unable to absorb new entrants, and growing risks to international trade access, the country’s job creation prospects are increasingly under threat. While government reform efforts are underway, delays and implementation issues continue to hold back meaningful progress. Stronger, decisive action will be required to stabilise the economy and protect vulnerable sectors from further job losses.
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