South Africa’s unemployment rate rose to 32.9% in the first quarter of 2025, frustratingly, irritatingly and ominously underlining – for the n-th time – the country’s terrible habit of being unable to generate sufficient economic growth to increase employment.
The numbers, economists say, tell part but not the whole story. South Africa’s unemployment is difficult to measure, but to the extent that it accurately portrays the state of the economy, it has been a more or less constant reminder of how weak and how badly managed the economy is turning out to be.
The most positive, rose-tinted perspective on the latest numbers released this week by Stats SA would go something like this: unemployment does tend to rise in the first quarter and, in the longer term, the rate has more or less stabilised following the end of the Covid pandemic and the establishment of the government of national unity. It is, in fact, lower than it was in late 2021.
But this avoids the obvious. First, South Africa has an unemployment rate that is very close to the highest functional rate among major economies with reliable data. Second, even by its own calculations, the rate has increased by 10 percentage points since 2016. And third, unemployment in South Africa is now 10 percentage points higher than in neighbouring Namibia, which achieved democracy at roughly the same time and under roughly similar conditions.
It is, in short, an enduring illustration of poor judgment, bad economic choices and an inability to adapt to changing economic circumstances.
What are the causes of this parlous situation? The most recent data offers some clues: the provinces with the highest increases are those most dependent on mining and, generally speaking, the worst managed.
The labour absorption rate in the most urbanised provinces, Gauteng and the Western Cape, is the highest, while the predominantly rural provinces of North West, Mpumalanga, the Eastern Cape and Limpopo are the most stressed. Mining, trade and domestic work were the biggest losers in the sector breakdown.
And very significantly, the biggest gains were achieved in the informal rather than the formal sector.
Daan Steenkamp, CEO of Codera Analytics, says the problem from a macroeconomic point of view is that South Africa has both a very low rate of growth and very low employment elasticity. In other words, even when the economy expands, employment doesn’t necessarily follow. South Africa seems to be stuck in a jobless growth trap, which becomes particularly apparent during periods of low growth.
Part of the problem, he argues, is that South Africa inherited a structurally weak labour market that was “far away from what any kind of natural equilibrium” would look like. That issue was exacerbated by high levels of government interventionism, “based on the idea that: a) the state should solve these problems; and b) that the state can solve these problems. I don’t think either of those things are true.”
The chances that South Africa had to, for example, process its mined gold, platinum or iron ore into refined products for exporting are long gone.
“I’m afraid we’ve basically missed the last opportunity to have labour-absorbing industrialisation,” says Steenkamp. “We’ve had one or two opportunities to beneficiate and create jobs, but we let them slip through our fingers because we’ve made it difficult for firms to hire even when it would have been in their interest to do so.”
Casey Sprake, economist at Anchor Capital, echoes this view, saying: “South Africa continues to grapple with a relentless rise in unemployment, casting a shadow over the country’s recovery efforts.
“While recent key reform measures point to a more positive trajectory, this progress has not yet trickled down to many South Africans in the form of job opportunities. Structural challenges, such as a skills gap, labour market rigidities and the lingering impact of the Covid pandemic, have exacerbated unemployment rates – especially among the youth.”
The jobless rate among those aged 15 to 34 climbed to 46.1% in the first quarter of 2025, up from 44.6% the previous quarter. Nearly 59% of unemployed youth have no prior work experience – a stark reminder of how hard it is to break in without a foothold.
“As the economy expands, the persistent lack of jobs threatens to widen the inequality gap,” Sprake says in an emailed note, “undermining social stability and eroding the gains of recent economic advancements.”
In 2024, South Africa’s economy grew by just 0.6%, a performance that underscores the country’s persistent struggle to generate meaningful momentum. The outlook for 2025 remains subdued, with forecasts ranging from 1% from the International Monetary Fund to 1.7% from the South African Reserve Bank, reflecting ongoing structural challenges and a fragile recovery.
“Material job creation has only occurred when GDP growth approaches 3% per annum,” Sprake says. “At the end of the day, South Africa’s unemployment problem is a complex and multifaceted issue that requires sustained and co-ordinated efforts from all sectors of society to create inclusive and sustainable employment opportunities for all South Africans.”
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