Advertise with

The worldwide unemployment rate has dropped from 8% in 2010 to 5.2% in September 2018, according to a report by investment bank UBS.
The worldwide unemployment rate has dropped from 8% in 2010 to 5.2% in September 2018, according to a report by investment bank UBS.

Global unemployment at lowest level in almost 40 years


By Sunita Menon - Dec 10th 2018, 09:32

While global unemployment has fallen to its lowest level in almost 40 years, SA is among four countries with an unemployment rate higher than that immediately preceding the 2007/08 global financial crisis. 

The worldwide unemployment rate dropped from 8% in 2010 to 5.2% in September 2018, according to a report by investment bank UBS — the lowest level since the 5% unemployment rate recorded in 1980.

The steep decline has been attributed to more flexible working practices, lower wages and rock-bottom interest rates. The decline is also largely due to sharp falls in unemployment in industrialised countries.

However, unemployment in Greece, Italy and Spain is more than 2 percentage points higher than the pre-crisis level of December 2007, according to the report, and in SA it is 5.4 percentage points higher.

The UBS survey covered 48 developed and emerging economies that between them account for 84% of global output. The report categorises someone as employed if he or she did any paid work in a given week.

SA’s unemployment is nearing the 30% mark, according to data from Stats SA. The institution’s quarterly employment survey is likely to reflect weak labour market dynamics consistent with persistently weak economic activity, said Investec economist Kamilla Kaplan.

The UBS report notes that SA will struggle to get growth above 2% because of “sluggish investments”.

While data from last week showed SA has emerged from its first recession since the global financial crisis, growth remains weak. National Treasury expects growth of 0.7% this year, while the Reserve Bank expects 0.6%. UBS predicts growth of just 0.5%.

The country has not breached the 2% mark since 2013.

‘Low-base recovery’

But Nedbank senior economist Nicky Weimar warned that these figures simply indicate a recovery from the low base recorded in the first two quarters of the year; they are not indicative of improved momentum in the economy.

“An improvement can only take place in the presence of meaningful job creation, which is unlikely to occur in the absence of meaningful structural reform that encourages investment,” she said.

However, UBS said the economy may benefit from some of the government’s policy movements, including finalisation of the mining charter and withdrawal of the Mineral & Petroleum Resources Development Amendment Bill, alongside spectrum allocation and governance changes at state-owned enterprises. The bank also forecasts some recovery in corporate and foreign investments in 2019/20. Should growth improve, SA’s “investment and jobs drive should start to yield results”.

For Citadel chief economist Maarten Ackerman, GDP growth would need to reach 3% “as a bare minimum” to “create inclusive growth and address key issues of poverty and unemployment”.
Business Live 

Related News

SA’s jobless rate climbs to 11-year high
31/07/2019 - 09:28
SA’s unemployment rate jumped to an 11-year high of 29% in the second quarter of the year, which is likely to make it harder for President Cyril Ramaphosa to fulfill his promise of creating a quarter of a million jobs a year.

Increase in sales reflect stronger second quarter
13/06/2019 - 10:41
Data from Statistics South Africa (StatsSA) showed that retail sales in April increased 2.4percent year-on-year - the strongest gain in retail trade in six months, providing further evidence that the economy began the second quarter on a firmer footing following the first quarter’s 3.2percent plunge.

Physical stores are not dead, but boring retail is
05/04/2019 - 16:18
Retail is not dead, and physical stores are not dead, but "boring retail" is dead, according to Linah Maigurira, Google's head of retail business in South Africa.

Retail sales recover in January after dismal December figures
22/03/2019 - 09:23
Retail spending showed signs of recovery in January, growing 1.2% on an annualised basis, slightly faster than analysts had expected.

Manufacturing growth far lower than expected
14/03/2019 - 15:46
The manufacturing sector saw tepid growth at the start of 2019.