South Africa Sheds 80,000 Jobs as Unemployment Crisis Deepens Amid Weak Economic Growth

South Africa’s formal sector experienced a significant contraction in the second quarter of 2025, shedding 80,000 jobs and pushing total employment down by 0.8 percent from the previous quarter. Statistics South Africa reported on Tuesday that total employment fell from 10.59 million in March to 10.51 million in June, marking another troubling chapter in the nation’s persistent unemployment crisis.

The quarterly job losses, while substantial in their own right, form part of a more alarming year-on-year trend. Employment has declined by 229,000 positions, representing a 2.1 percent decrease compared to the same period in 2024. These figures underscore the severe challenges facing Africa’s most industrialized economy as it struggles to generate sufficient employment opportunities for its growing labor force.

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Sectoral Analysis: Widespread Job Losses Across Industries

The employment decline was not confined to a single sector but rather reflected widespread weakness across South Africa’s economic landscape. Community services, which includes government employment and social services, experienced some of the sharpest losses. This sector’s contraction has raised particular concerns among trade unions, with Cosatu suggesting that funding cuts, particularly from international sources such as the United States earlier this year, may have contributed to the downturn.

The trade sector, traditionally a significant employer in South Africa’s economy, also recorded substantial job losses during the quarter. Manufacturing, a key industrial segment that has historically provided stable employment for skilled and semi-skilled workers, continued its troubling downward trajectory. The construction industry, often viewed as a bellwether for broader economic confidence and investment activity, similarly shed positions.

Transport and business services both experienced employment declines, reflecting reduced economic activity and cautious business sentiment. The cumulative effect of losses across these sectors painted a picture of an economy struggling to maintain momentum across its diverse industrial base.

Only two sectors managed to buck the negative trend. The mining industry, long a cornerstone of South Africa’s economy despite its reduced relative importance compared to past decades, recorded modest employment gains. The electricity sector also added workers, possibly reflecting ongoing efforts to address the country’s well-documented power supply challenges and investments in generation capacity.

Full-Time Versus Part-Time Employment Dynamics

The employment picture becomes even more concerning when examining the breakdown between full-time and part-time positions. Full-time employment contracted by 44,000 jobs during the second quarter, with losses concentrated in community services, business services, manufacturing, construction, trade, and transport sectors. These are precisely the types of stable, permanent positions that provide workers with reliable income and benefits, making their disappearance particularly troubling for household financial security.

Part-time employment, which often offers less security and lower compensation, fell by 36,000 positions. This suggests that even employers seeking flexibility through part-time arrangements were reducing their workforce, indicating genuine economic weakness rather than a simple shift in employment patterns.

The decline in both employment categories demonstrates that South Africa’s jobs crisis extends beyond questions of employment quality to fundamental issues of job availability. When even part-time and temporary positions become scarce, it signals deep-seated economic challenges that go beyond normal business cycle fluctuations.

Rising Unemployment Rate and Youth Joblessness

The official unemployment rate climbed to 33.2 percent in the second quarter of 2025, continuing an upward trajectory that has seen unemployment reach levels among the highest globally. This figure, which counts only those actively seeking work, understates the true extent of South Africa’s employment challenge.

The expanded unemployment rate, which includes discouraged work-seekers who have given up looking for jobs, stood at 42.9 percent in the previous quarter. While there was a marginal improvement with 28,000 fewer discouraged workers, the fact that more than two out of every five potential workers remain outside formal employment represents a national crisis with profound social and economic implications.

Youth unemployment presents an even more dire picture. The youth unemployment rate for those aged 15-24 years reached a staggering 62.2 percent in the second quarter, meaning nearly two-thirds of young South Africans in this age bracket who want to work cannot find employment. For the broader youth category of 15-34 years, unemployment stood at 46.1 percent, affecting approximately 4.8 million young people.

Statistics South Africa’s analysis reveals that 58.7 percent of unemployed youth in the first quarter of 2025 reported having no previous work experience. This creates a devastating catch-22 situation: young people cannot get hired without experience, yet they cannot gain experience without being hired. This experience gap threatens to create a “lost generation” of workers who may face diminished employment prospects throughout their careers.

Educational Disparities and Employment Outcomes

Educational attainment remains a critical determinant of employment prospects in South Africa, though even higher education no longer guarantees job security. Youth without a matric qualification (high school diploma) face an unemployment rate of 51.6 percent, the highest across all education levels. This underscores the fundamental importance of completing basic education as a prerequisite for labor market participation.

Those who complete matric see only marginal improvement, with unemployment remaining elevated at 47.6 percent. Vocational and technical training provides somewhat better outcomes, reducing unemployment to 37.3 percent among this group. University graduates fare best with an unemployment rate of 23.9 percent, though this still represents roughly one in four graduates unable to find work despite their tertiary qualifications.

These statistics highlight a multifaceted challenge. South Africa faces both a skills mismatch, where available workers lack the qualifications employers seek, and insufficient overall job creation to absorb even well-educated job seekers. The 11.7 percent graduate unemployment rate, while lower than other categories, still represents a significant waste of human capital and educational investment.

Economic Growth Constraints: The Root Cause

Economists unanimously point to weak economic growth as the fundamental driver of South Africa’s employment crisis. Professor Raymond Parsons from North-West University Business School emphasized that “unemployment is too high because economic growth is too low,” arguing that only significantly higher inclusive GDP growth can successfully address this challenge.

South Africa’s GDP growth expanded by just 0.8 percent in the second quarter of 2025 compared to the previous quarter. Economic forecasts for 2025 have been repeatedly revised downward, with many economists now projecting full-year growth of approximately 0.9 to 1.0 percent. This stands in stark contrast to the 3.5 percent annual growth that economists estimate is necessary just to prevent unemployment from rising further.

Over the past decade, South Africa’s average economic growth has been anemic at around 1.7 percent annually. This decade to date, growth has averaged an even more dismal 0.4 percent, with the COVID-19 pandemic lockdowns being only one factor among many structural constraints limiting economic expansion.

Professor Waldo Krugell called the job loss figures “grim but unsurprising,” noting that “when the economy hardly grows, we cannot expect much job creation.” He described the 80,000 quarterly job losses as “a lot” and the year-on-year decline as “staggering,” emphasizing the scale of the crisis.

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Structural Impediments to Growth and Employment

Multiple structural factors constrain South Africa’s economic potential and consequently its ability to generate employment. Elevated production costs continue to weigh on business profitability, making it difficult for companies to expand operations and hire additional workers. Energy costs, while somewhat improved from the darkest days of rolling blackouts, remain a concern as the electricity distribution system ages and requires substantial investment.

Red tape and regulatory burdens impede business formation and expansion. Investec economist Lara Hodes noted that “elevated costs of production continue to weigh on profitability, while high levels of red tape and structural challenges impede optimal activity.” These administrative barriers disproportionately affect small and medium enterprises, which are typically the engines of job creation in developing economies.

Infrastructure deficiencies represent another critical constraint. The state-owned freight rail and ports operator, Transnet, continues to face severe operational challenges that have created a domestic freight crisis. In March 2025, Transnet acknowledged that its “(c)ritical challenges… have led to muted economic growth for the country,” citing unreliable electricity supply, increased crime, and rail underinvestment as key factors.

The inability to efficiently move goods from production sites to markets, and from ports to international destinations, directly undermines economic competitiveness and discourages both domestic and foreign investment. Mining and manufacturing production both contracted in the first quarter of 2025, partly due to these logistical constraints.

Business and Consumer Confidence Erosion

Dr. Eliphas Ndou, an economist at the University of South Africa, linked the job losses directly to deteriorating sentiment. “Business and consumer confidence indices have displayed waning confidence due to weakening domestic conditions and expectations of weak global economic growth,” he explained. “The decrease in total employment is a symptom of weak growth and lingering trade and policy uncertainty.”

When businesses lack confidence in future demand and economic conditions, they postpone hiring decisions, cancel expansion plans, and may even reduce existing workforce levels to cut costs. Similarly, weak consumer confidence translates into reduced spending, which further dampens business activity and employment prospects in a self-reinforcing negative cycle.

The SARB Quarterly Bulletin noted that year-on-year employment growth slowed dramatically to just 0.3 percent in the first quarter of 2025, significantly slower than the 3.4 percent recorded in the first quarter of 2024. This deceleration reflects the impact of weakening economic conditions on hiring decisions across the economy.

Trade Policy Uncertainty and External Pressures

Parliamentary coordinator for Cosatu, Matthew Parks, suggested that job losses in agriculture and manufacturing sectors could be partly attributed to concerns about potential U.S. tariffs and trade policy changes. South Africa’s eligibility for the African Growth and Opportunity Act, which provides duty-free access to U.S. markets for many products, faces periodic reviews and potential challenges.

Trade policy uncertainty makes it difficult for export-oriented businesses to plan long-term investments and hiring. When companies cannot be confident about their ability to access key markets, they adopt a cautious approach to workforce expansion, preferring to wait for greater clarity before committing to permanent employment increases.

The global economic environment has also proven challenging, with major trading partners experiencing their own growth slowdowns and implementing policies that could affect demand for South African exports. This external dimension adds another layer of complexity to South Africa’s domestic employment challenges.

Social and Political Implications

The unemployment crisis carries profound social implications that extend far beyond economic statistics. Trade union Uasa emphasized that families are “being pushed further below the poverty line with another 80,000 jobs down the tubes in June.” Spokesperson Abigail Moyo warned that “with unemployment already one of the leading contributors to hardship, many South Africans are struggling to put food on the table and secure basic necessities.”

High unemployment, particularly when concentrated among youth, threatens social stability and cohesion. When large segments of the population see no pathway to economic participation and advancement, it can fuel social unrest, crime, and political instability. The economic exclusion of millions of working-age South Africans represents not just an economic failure but a threat to the social compact.

Moyo argued that “the ongoing loss of jobs in critical industries is a clear indication that urgent structural reforms, investment in infrastructure, and better management of state resources are necessary to prevent the economy from collapsing. Without strict interventions, unemployment will likely continue to spiral out of control, exacerbating inequality and threatening social stability.”

Policy Responses and Reform Imperatives

Political parties and stakeholders across the spectrum acknowledge the severity of the crisis while proposing varying approaches to address it. Michael Bagraim, the Democratic Alliance spokesperson on employment and labour, stated that “South Africa’s jobs crisis demands immediate reform and only real action can turn opportunity into work for millions.”

The DA has tabled a six-point plan aimed at what Bagraim described as an effort to “turbocharge growth and open the doors to work.” While specific details vary, there is broad consensus among economists and policymakers that comprehensive structural reforms are essential to break South Africa out of its low-growth, high-unemployment trap.

Professor Parsons stressed the need to “inject more urgency and direction into growth-friendly reform policies that can make a difference.” The challenge lies not just in identifying necessary reforms but in implementing them with sufficient speed and comprehensiveness to materially impact employment outcomes in the near term.

Potential reform areas include labor market regulations to encourage hiring, reduced regulatory burdens on businesses, improved infrastructure investment and management, enhanced skills development aligned with market needs, and measures to improve the ease of doing business. However, implementing such reforms requires navigating complex political dynamics and balancing various stakeholder interests.

Looking Ahead: Dim Prospects Without Intervention

The outlook for South African employment remains concerning without significant policy intervention and economic acceleration. Forecasters project that the South African economy will create only approximately 115,000 jobs in 2025, notably less than an anticipated 340,000 increase in the labor force. This arithmetic makes clear that under current trends, unemployment will continue rising rather than declining.

To simply stabilize the unemployment rate, South Africa needs economic growth of at least 2.0 percent per annum. To make meaningful progress in reducing the jobless rate toward 2030, growth of at least 3.5 percent annually would be necessary. Current growth projections of around 1.0 percent fall woefully short of these requirements, suggesting that absent dramatic policy shifts, the unemployment crisis will persist and potentially worsen.

The 80,000 jobs lost in the second quarter of 2025 represent more than statistics on a government report. Each lost position represents a household facing financial stress, individuals unable to support their families, young people seeing their futures constrained, and the broader social costs of economic exclusion. As South Africa grapples with what economists universally describe as unsustainably high unemployment, the imperative for comprehensive, urgent action has never been clearer.

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By: Montel Kamau

Serrari Financial Analyst

1st October, 2025