South Africa’s unemployment rate climbs to 33.2% in Q2 2025

The official unemployment rate in South Africa has risen for the second consecutive quarter, reaching 33.2% in the April-June period of 2025. This increase, up from 32.9% in the first quarter, places the country among those with the highest jobless rates in the world and underscores one of the most formidable challenges facing its year-old coalition government.

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Formed after the African National Congress (ANC) lost its parliamentary majority in the historic 2024 general election, the Government of National Unity (GNU) has made reducing unemployment a central priority. However, despite its best intentions, the latest data from Statistics South Africa’s Quarterly Labour Force Survey shows that a meaningful drop in the jobless rate remains an elusive goal. This report explores the nuances of the latest statistics, delves into the deep-seated causes of the crisis, and examines the political and economic hurdles the new administration must overcome.

The Numbers Tell a Story of Stagnation

The headline figure of 33.2% is just the tip of the iceberg. Statistics South Africa (Stats SA) reported that the number of unemployed people grew by nearly 140,000, reaching a total of 8.367 million in the second quarter. While this number is staggering, it’s crucial to understand the two main measures of unemployment used by Stats SA.

The official unemployment rate includes only those who are actively looking for work. However, the expanded unemployment rate also accounts for “discouraged work-seekers”—individuals who have given up looking for a job because they believe no suitable work is available. While the official rate rose, the expanded definition actually saw a slight drop. This seemingly positive development, however, points to a troubling trend: some people who were actively searching for work in the first quarter have now become discouraged and are no longer counted in the official figures. It’s a shift that paints a grim picture of waning hope and persistent economic barriers.

This high rate is not a recent phenomenon. South Africa has been grappling with high unemployment for decades, with the rate consistently hovering above 20% since the late 1990s. This latest figure is a stark reminder that the country’s labor market challenges are deeply entrenched and require more than just short-term fixes.

The Deep Roots of the Crisis: A Structural Problem

To understand why South Africa’s unemployment rate remains so high, we must look beyond the quarterly fluctuations and examine the structural issues that have plagued the economy for years. This is not simply a matter of a recent downturn; it is a long-term, systemic challenge.

1. The Skills Mismatch and Education Gap

A key driver of unemployment is the profound mismatch between the skills of job seekers and the needs of the modern economy. South Africa’s education system, particularly at the secondary level, has often failed to produce graduates with the technical and critical thinking skills that industries require. As a result, many young, first-time job seekers, the demographic group hit hardest by unemployment, are unable to find work.

The World Economic Forum’s Future of Jobs Report highlights how global trends, such as the rise of artificial intelligence and automation, are transforming labor markets everywhere. While these changes create demand for new skills in technology, data science, and engineering, South Africa’s workforce is often unprepared. This creates a dual problem: a surplus of unskilled labor and a shortage of skilled professionals, which hinders economic growth and exacerbates the unemployment problem.

2. Slow Economic Growth and Persistent Inequality

A second, and arguably more fundamental, cause is the country’s anemic economic growth. For years, South Africa’s economy has expanded at a rate far below what is needed to create jobs for its rapidly growing population. A low-growth environment means a limited number of new employment opportunities are created each year.

This is compounded by the country’s extreme levels of inequality, a direct legacy of apartheid. The economy remains highly concentrated, with a small number of large corporations dominating key sectors. This can limit competition, stifle the growth of small and medium-sized enterprises (SMEs)—often the biggest drivers of job creation—and maintain a fragmented labor market where opportunities are not distributed equitably. The recent job losses in sectors like agriculture and finance are a clear symptom of this broader economic weakness.

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A Sectoral Breakdown: Where the Jobs Are Disappearing

The Stats SA report indicated that six out of the ten industries tracked saw a decrease in employment. The most significant job losses were recorded in community and social services, agriculture, and finance. A closer look at each of these sectors reveals unique challenges.

• Community and Social Services: The decline in this sector, which includes government jobs and public services, is likely tied to the government’s ongoing fiscal constraints. With a heavy budget deficit, the coalition government is under pressure to rein in spending. This often leads to a freeze on new hires or a reduction in temporary contracts, directly impacting employment in this key sector. A recent report by Statistics South Africa noted that job losses in this formal non-agricultural sector were significant in the first quarter of 2025, primarily due to decreases in government spending and bonus payments.
• Agriculture: Job losses in agriculture are particularly concerning, as the sector is a vital source of employment in rural areas. While the sector’s long-term employment is above average, the quarterly decline is attributed to several factors. A recent analysis from agricultural economist Wandile Sihlobo points to challenges like the ongoing foot-and-mouth disease outbreak in the cattle industry and delays in harvesting due to an unusually long and rainy summer season. This has put financial pressure on the livestock industry and created a more volatile job market in certain sub-sectors.
• Finance: The finance industry, traditionally a strong pillar of the South African economy, is not immune to the pressures of a slow-growing economy. In addition to the broader economic slowdown, the sector is also undergoing a rapid digital transformation. The rise of automation, generative AI, and financial technology (FinTech) is reshaping traditional banking and insurance roles. While these changes create new, specialized jobs, they often displace a larger number of less-skilled positions, contributing to a net loss of employment in the short to medium term.

The Tariff Tangle: A New Economic Headwind

The news report also mentioned the potential impact of new U.S. tariffs, a factor that could compound South Africa’s employment woes. A top statistics official, Risenga Maluleke, commented that it was too early to see the effects on the latest jobs data. However, the economic community is watching this development with great concern.

Last week, the U.S. imposed a 30% tariff on South African exports, the highest rate among all sub-Saharan African countries. This significant policy shift is a departure from the previously low-tariff trade environment and is a direct consequence of escalating global trade tensions, particularly those between the U.S. and its partners.

The South African government has issued a joint statement on its response to these tariffs, acknowledging the serious threat they pose. While the U.S. is South Africa’s third-largest trading partner, South Africa’s exports account for a small fraction of total U.S. imports. The government argues that South African exports, such as counter-seasonal agricultural products, do not threaten U.S. industries. Nevertheless, the tariffs are now in place.

The agricultural and automotive sectors are expected to be hit the hardest. For example, citrus exporters, a key part of the agricultural sector, will likely feel the pain most acutely. The government’s plan is to engage in negotiations, while also looking to diversify its export markets to other regions, such as Asia, the Middle East, and India, to mitigate the economic fallout. The uncertainty created by these tariffs could deter investment and further complicate job creation efforts, especially in export-oriented industries that rely on the U.S. market.

The Informal Economy Debate: A Challenge of Measurement

The original news story also brought to light a perennial debate: how to accurately measure the size and contribution of South Africa’s informal economy. Risenga Maluleke, the head of Stats SA, was asked to respond to criticism from a former banking executive who claimed that the agency was underestimating the number of informal jobs. Maluleke dismissed the claim, stating that Stats SA has always measured and made available its data on the informal sector.

The informal economy, which includes everything from street vendors and small-scale traders to unregistered home-based businesses, is a vital source of income for millions of South Africans. According to recent Stats SA data, informal sector employment accounts for almost 20% of total employment. However, accurately quantifying this sector is notoriously difficult for a number of reasons:

• Lack of Formal Records: Informal businesses often do not keep formal financial records or register with tax authorities, making them hard to track.
• Volatile Nature: Jobs in the informal sector are often temporary, seasonal, and unpredictable, making them difficult to capture in a quarterly survey.
• Changing Landscape: The informal economy is constantly evolving. While it has traditionally been dominated by the trade industry, recent years have seen growth in other sectors like services, construction, and transport, as noted in a recent Stats SA report.

This debate over measurement is not just an academic exercise. A better understanding of the informal economy is critical for policymakers who need to design effective interventions to support these businesses and the people who depend on them. Maluleke’s comments and the planned updates to Stats SA’s data collection methods show that this remains a priority for the agency.

The Coalition’s Uphill Battle: Government Policies and the Path Forward

The formation of a coalition government, a first in the country’s post-apartheid history, was seen by some as a new opportunity to tackle South Africa’s long-standing problems. The new administration, a mix of parties with different ideologies, has a daunting task ahead of it.

The National Development Plan (NDP), which aims to eliminate poverty and reduce inequality by 2030, has been the long-term blueprint for job creation. It outlines key pillars, including growing an inclusive economy, building a more capable state, and improving education and skills. The government has a number of programs already in place to support these goals, such as the Youth Employment Service (YES), the Employment Tax Incentive (ETI), and the Expanded Public Works Programme (EPWP).

However, the political reality of a coalition government presents new challenges. Achieving consensus on economic policy, particularly on sensitive issues like labor laws, is a major hurdle. The coalition must navigate between a desire for market-friendly policies that encourage business investment and the need for social programs that address historical inequalities. The government’s ability to maintain a stable coalition while pushing through meaningful economic reforms will be the key to its success or failure in tackling the unemployment crisis.

In his press conference, Maluleke’s statement that it would be a “big mistake” to assume South Africa does not have an unemployment challenge serves as a powerful and direct message to the nation’s leaders. The path to a solution is long and difficult, requiring not only sound economic policies but also a united political will to implement them. The latest jobs data shows that the work has only just begun.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

13th August, 2025