Over the past 14 years, the official employment number in South Africa has remained stubbornly flat at around 15m. Stats SA’s Quarterly Labour Force Survey (QLFS) puts the employment CAGR at only 0.5% over this period, which is one-third that of average GDP growth. Despite the apparent increase in unemployment, credit providers extended credit to 26.6m consumers. We scrutinise the official employment data and note differing job growth rates between the QES and the QLFS. We posit that there may be a bias to under-report employment by lower-income respondents in the QLFS, possibly motivated by child grants.
Our concerns are supported by some reasonability tests. For example, there is little evidence that a new segment that showed high growth – drivers for food delivery and ride-hailing apps – is captured by the stats. Another check shows that the combined employment of 12 large retailers accounted for 40.6% of the total retail sector in 2010, but that share increased to 50.3% by 2021 – an implausible outcome considering the major retailers’ revenue market share increased by only 100bps over the period. Other inconsistencies include the construction sector, where employment at seven large construction firms dropped by 66.3% between 2013 and 2021, whereas Stats SA recorded a drop of only 3.1% for the sector.
We calculate an alternative estimate of likely employment to be c. 1.1m higher than the official stats, which would reduce the unemployment rate to 27.7% (compared to the 32.9% reported in 4Q22).
We conclude that the apparent rigidity of the official employment data should be investigated by Stats SA, including issues such as the potential understatement of employment status by lower-income households.