What Factors Contributed to the Current Decline in the Rate of Unemployment?

Unemployment has been around for years, but there has been an increase in the number of people unemployed since the coronavirus. South Africa has recorded its highest unemployment rate in decades. Ever since the coronavirus, many companies have made a loss. Businesses big and small have had to shut down, causing unemployment. What exactly is unemployment you may ask? The term unemployment refers to a situation when a person who is actively searching for employment is unable to find work. The most frequent measure of unemployment is the unemployment rate, which is the number of unemployed people divided by the number of people in the labor force. It has been a problem for years.

History of Unemployment

The earliest attempt to measure unemployment at the national level was the 1880 Census. It asked all those aged 10 or older who reported a “profession, occupation, or trade” the number of weeks they had been unemployed during the Census year (from June 1, 1879 to May 31, 1880). Unemployment is caused by various reasons that come from both the demand side, or employer, and the supply side, or the worker. Demand-side reductions may be caused by high interest rates, the global recession, and the financial crisis. From the supply side, frictional unemployment and structural employment play a great role.

Covid Affect On the Unemployment Rate

Ever since the virus took the world by storm. Many businesses had to shut down because of the level 5 lockdown. With no one buying, this has led to businesses not earning the money they have spent or making a profit. Thus, leading to unemployment. Who could have foreseen this? No one was prepared. With so many losing their jobs or graduating from university or even finishing high school. The rate of unemployment skyrocketed. The official unemployment rate is now 34.4%. In other words, over 7.8 million people do not have a job, according to Stats SA. Trends show that unemployment is concentrated among the youth and the black African population. The labour market is also more favourable to men than to women. South Africa’s unemployment rate surged to the highest on a global list of 82 countries monitored by Bloomberg.

The unemployment data is likely to deteriorate in the third quarter because the government tightened Covid-19 curbs in the face of a third wave of infections. Hindering efforts to revive an economy that shrank 7% last year. Rising joblessness rates could heap pressure on authorities to extend relief measures. That would complicate efforts to stabilize public finances. There was also an eruption of deadly riots in July in the Gauteng and KwaZulu-Natal provinces. Two key economic hubs, which claimed 354 lives and saw thousands of businesses looted and shuttered. The unrest cost the country about 50 billion rand ($3.3 billion). In lost output and placed at least 150,000 jobs at risk, according to the South African Property Owners Association.

South Africa at Risk

The unemployment rate in Africa’s most-industrialized economy has been above 20%. For at least two decades. Even though output expanded by 5% or more a year in the early 2000s. South African companies’ ability to hire is undermined by an education system. That doesn’t provide adequate skills and strict labor laws. That makes hiring and firing workers burdensome. The apartheid-era strategy of placing so-called townships, where many Black citizens were compelled to live, on the border of cities also makes it difficult for residents to access the formal jobs market. The labour market is more favourable to men than it is to women.

Statistics

• The finance industry lost 278,000 jobs.
• Community and social services lost 166,000 jobs.
• Manufacturing lost 83,000 jobs.
• Construction added 143,000 jobs.
• Agriculture added 69,000 jobs.

Global Unemployment Rate

Nearly one billion people, around world. Approximately 30% of the entire global work force are unemployed or under­employed in industrialized and developing countries alike. The economic crisis caused by the COVID pandemic is expected to contribute to global unemployment of more than 200 million people next year, with women and youth workers worst-hit. Just as South Africa was affected, so were other countries. The number of working hours that disappeared because of COVID-19 are equivalent to 255 million full-time jobs being lost around the world.

Not only have young people suffered more than adults, but young women have been hit the hardest by unemployment during the pandemic. Hundreds of millions of jobs have been put on hold because of coronavirus shutdowns around the world. That’s been especially true in countries already hit by the pandemic. But other areas, like Africa and much of South America, are suffering from the international economic fallout and are likely to face heightened job losses.

Mass Riots led to an increase in the unemployment rate.

Over a month and a half ago. Riots broke out in KwaZulu-Natal and Gauteng. As mentioned above, this unrest cost the country 50 billion rand. South Africa has among the highest recorded levels of social protest of any country in the world. The reasons behind this are more complex than often assumed. The scale and severity of the looting and sabotage in KwaZulu-Natal and parts of Gauteng in July, following the jailing of former president Jacob Zuma, has brought social protest and civil unrest into the popular discourse.

The truth is that, while disgruntlement by Zuma’s supporters was the trigger, the roots of social unrest go much deeper. It is important to understand what lies behind this trend of growing social unrest, which makes the country precarious, and what might be done to tackle the underlying causes. If the government wants to avoid a repeat of the social and economic catastrophe of the July 2021 riots. Even if on a smaller and more localised scale. It should look back to learn some important lessons about why protests happened and how to address this.

Seeds of discontent

There are a number of key factors in understanding the reasons behind social protest in South Africa:

First, it is important to recognise that the people and places with the highest levels of social and economic deprivation are not those most likely to protest. The provision of basic services, such as electricity, water and sanitation is heavily concentrated in the metropolitan areas, such as Johannesburg, Cape Town, eThekwini, Tshwane, Nelson Mandela Bay and Mangaung. Yet rural municipalities actually have much lower levels of service coverage. Access to basic services has also improved across the country over the past two decades. But delivery protests have increased exponentially over the same period. There are evidently deeper and more complex reasons behind how and when ineffective delivery of municipal services ends up in social conflict.

Second, it is often a sense of unfairness (inequality), not just levels of provision, that leads to grievances and resentment, which spark social protest. For instance, long-standing differences in amenities between neighbouring communities send a clear signal that the government is not willing or not able to meet their needs in an equitable manner. A case in point is informal settlements, which have often been hotspots for protest action. Rural migrants arrive in the city with expectations of a better life, only to end up living in squalor. Until the government can implement a realistic and scalable plan for upgrading informal settlements, this is likely to continue.

Effects of the unrest

Third, government departments tend to get fixated with meeting numerical targets at the expense of service quality and what matters most for communities. Recent research suggests that municipal officials get locked into a culture of “playing it safe” and “compliance” in delivering services and related public investments, rather than innovation and genuine transformation. An infamous example is the delivery of toilets in an open field where municipalities get the credit and contractors get paid for erecting them, whether or not there are any houses or people living in the vicinity. The government needs to stop paying “lip service” to the principles of community consultation and local participation, and take this work seriously. The extra time and effort are justified by aligning municipal plans and investments closer to people’s current priorities. Local buy-ins can also help ensure that investments in public infrastructure are protected and maintained.

The effects of the unrest

Finally, feelings of frustration and anger have been heightened by years of waiting for promises to be fulfilled. International studies suggest that communities are more likely to protest when they can clearly attribute blame, and where visible institutions are perceived to possess the means for redress. Municipal services have a clear line of sight, where communities can easily measure and attest progress in their experience of daily life. Mismanagement and corruption have led to the collapse of many municipalities in recent years. This is especially so in smaller cities and towns, with images of sewage running down the street and no water in the pipes. In this way, grievances over service delivery are a common trigger for social protest. But the grievances often reflect a much broader basket of discontent.

Over the last 18 months, the hardship and suffering facing poorer urban communities, in particular, has been compounded by their disproportionate loss of jobs and livelihoods during the pandemic. The reality of hunger and food insecurity is a moral issue but also critical for social stability. The recent extension of the R350 (US$23) special COVID-19 monthly grant should help to alleviate some of the immediate pressures on poorer households. But, the country also needs a clearer plan of how to tackle the problem of food insecurity.

Some businesses may take years to be rebuilt, according to industry groups. KwaZulu-Natal (KZN) and Gauteng, South Africa’s economic hub which was also hit by violence, make up half of national GDP and almost half of the country’s population. The port of Durban handles 70 per cent of the country’s imports and is a gateway to southern Africa.

No quick fix

At the heart of the matter, South Africa’s deep-seated social inequalities and segregated living conditions provide fertile ground for popular discontent. There is no easy fix for these.

Metropolitan populations continue to expand. This places added pressure on poorer communities forced to cope with rapid densification, strained services, informality and sparse economic opportunities. Fractured communities and weak, under-resourced governing institutions further complicate the task of upgrading and transforming these neighbourhoods.

Meanwhile, affluent households can buy their way into places that are safer, better planned and have higher quality facilities. They can opt out of public services by paying for private schooling, healthcare and security. This accentuates the socio-economic divides even further.

There is a real danger that the current fiscal crisis will further corrode public services. This will encourage more and more middle-class families to buy into private provision. Unless the government gets to grips with this issue. The widening chasm between middle and working-class communities will amplify perceptions of unfairness and exacerbate social instability.

What happens next?

The unrest has left many with even less access to affordable food. Nearly 120, or about one in 10, ShopRite supermarkets in South Africa have been damaged by fire or looting. The company said. The retailer, which is Africa’s biggest grocer, added that it was “committed to rebuilding and restoring operations as quickly as possible. People across South Africa are surveying the damage caused by the politically triggered riots. The city of Durban has estimated over $1 billion in damage and lost goods. This, along with 129,000 jobs at risk, could amount to a $1.4 billion hit to the port city’s gross domestic product.

South Africa’s struggle to end the whites-only rule and the brutal apartheid system without plunging into civil war. Made it an international byword for a victorious fight for democracy. Despite gains made in the last two decades, and even though it runs Africa’s third-largest economy now. Millions of South Africans are still struggling, particularly during worsening economic conditions. Stoked by the coronavirus pandemic. Violence like what happened last month shows that South Africa must reduce historic levels of inequality. While cracking down on official corruption, which experts say fueled the unrest. If it doesn’t, such flashpoints could become more common, experts and residents fear.

Conclusion

In spite of all that has happened to the world and to South Africa, the country still finds a way to preserve it. Different governments from all over the world came together to face this challenge of COVID-19. Now people have their own challenges to face. Whether it be finding a new job or rebuilding the business from the bottom up. Or even moving on, past the old system. No matter what, they get back up again and adjust to the new. normal. We hear of all the bad things that have happened and, suddenly, we judge a book by its cover. Offering no help whatsoever.