Urgent reforms needed as South Africa faces deepening unemployment crisis

The South African economy in bleeding jobs at an alarming rate and what was once a crisis is turning into a an unemployement emergency with experts warning of resultant civil instability.

Nearly 75,000 formal sector jobs lost in the first quarter of 2025 alone, and 95,000 compared to the same time last year, according to Stats SA. Key sectors like trade, mining, construction, and community services were hardest hit, with only manufacturing showing slight growth.

The figures have prompted alarm from economists, labour unions, and mental health experts, who warn that without urgent reform, the country faces entrenched unemployment and broader social fallout. Slow economic growth, policy uncertainty, skills mismatches, and restrictive labour regulations are all seen as major contributors.

Abigail Moyo, spokesperson for the trade union UASA, said the latest figures are alarming.

“The Quarterly Employment Statistics reported by Stats SA indicate a contraction in employment, reversing the progress made towards the end of last year. Formal sector employment lost 74,000 jobs in the first quarter, and year-on-year data reveals that 95,000 jobs were lost between March 2024 and March 2025.”

She added: “The industries most affected include trade, community services, mining, electricity, construction, and business services. Only manufacturing showed slight growth, with a gain of 2,000 jobs.”

Moyo warned that this will worsen already dire conditions for many workers.

“The current economic outlook is not encouraging and fails to inspire hope... This situation exacerbates the insecurity faced by workers who are already under pressure from high living costs.

“We cannot continue to operate on the brink of a failing economy without any prospects for a better future. We urge both the government and employers to collaborate with trade unions and other stakeholders to rebuild the labour market, focusing on decent work, fair wages, and sustainable employment.”

Economist Ulricht Joubert pointed to a range of interlinked problems, beginning with poor economic growth.

“We had a growth rate in total of 0.6% last year compared to a growth in the population of one would guess around about 2%.”

He warned that migration and an inflexible labour dispensation were worsening joblessness:

“There is still an influx of people from the rest of Africa into South Africa and that increases the availability of labour in South Africa. If we look at the labour dispensation, where the government tries to instruct and regulate who  can be employed in South Africa, and that has a limiting effect.

“The economy never asks you, how old are you? What sex are you? What race are you? The economy only asks, are you capable of doing this specific job in such a way that it is competitive,. domestically and internationally.”

He also criticised the cost pressures created by unions and minimum wage regulation:

“If we have to employ people at these minimum wages - Why should I employ a person when a machine can do the job? The productivity has declined from the time that the minimum wages have been imposed on the agricultural sector.

“We have to get the education and training system in South Africa on a footing where employers will say, oh, but you know, if we employ this person because of his qualifications, because of his training, we’ll be able to do the job in a competitive way.”

He further raised concern over low investment.

“Yes, it’s at an unfortunate, very low level if we don’t invest, then it creates a problem down the line. Government policies create an uncertain environment and because of that, especially international companies say, "but why? Why should I invest?”

Economist Dawie Roodt was unequivocal in placing the blame on the ruling party.

“Why are we losing the jobs in the South African economy? Well, agriculture, is a very volatile sector, so it doesn't really tell us much. So don't look at agriculture, it's all over the place.”

“Manufacturing is much more important because manufacturing is an indicator of where we want economic growth, that's where we can create a relatively large number of jobs, and that is not growing. In fact, we are de-industrialising, we are losing our factories in South Africa.”

 “And there's one reason and that's the ruling party. They are simply following the wrong macro-economic policies, and as long as they keep on doing that, the economy is not gonna grow, and as long as the economy is not growing, we're not gonna create jobs in the economy.”

Roodt believes the focus needs to shift entirely.

“Actually, we should forget about job creation, and we should put all effort into growing the economy and jobs will look after themselves.”

“The underlying reason is just a government that's not doing what it's supposed to be doing and that's to create an environment that's conducive to economic growth. We certainly do not have that. That's the reason.”

Professor Renata Schoeman, head of the MBA in Healthcare Leadership at Stellenbosch Business School, highlighted the emotional cost of rising unemployment.

“Seeing what's going on around them and being faced with colleagues losing their jobs, there is definitely an increase in disengagement.”

“People work harder and harder because they are so scared of losing their jobs, they do not actually take the necessary breaks.”

“The fallout of this additional stressor, the financial stresses, the sense of failure as a provider and especially if they are unsuccessful in finding employment again.”

“Make sure that you don't expect other people to do the work of two or three employees, you burn them out as well.”

“It is very difficult to keep focusing on mental health when someone is in survival strategy... that you do invest in the mental health of your employees.”

“It's just your ethical obligation in terms of leadership, take care of those remaining and those that's going.”

tracy-lynn.ruiters@inl.co.za

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