A new record high (34,4%) in the South African unemployment rate in the second quarter of 2021 confirms the destructive impact that the Delta variant of the coronavirus and the accompanying lockdown restrictions have had on the economy and the labour market.

Prof Raymond Parsons, an economist from the Business School of the North-West University (NWU), says the outlook for the job market remains weak, as it is clear the full impact of the civil unrest in late July on economic activity will only become apparent in the third quarter of 2021.

In commenting on the latest quarterly unemployment figures in the Labour Force Survey for the second quarter of 2021, Prof Parsons says the total economic costs of the recent violence and civil unrest have not yet fully emerged.

“In these negative circumstances, unemployment is now indeed the ‘cruellest tax’ on vulnerable sectors of the population and job creation continues to demand top priority.”

He points out that there is, however, no quick fix. “Given the current uncertainties in the economic outlook, the immediate overall job situation is therefore likely to get worse before it gets better. The latest unemployment figures nonetheless send a renewed message that the balance between lives and livelihoods in handling the pandemic remains an acute dilemma that needs to be carefully managed in the period ahead.”

Prof Parsons says that, in the meantime, existing job support measures must be intensified. “The unemployment situation injects urgency into the implementation of the various important existing short-term economic support measures so as to offset to some extent the hardships being experienced by companies and workers who have been badly hit economically.”

According to him, it also highlights the importance of expediting the vaccination programme to speed up economic recovery.

“Above all, as the bulk of future job creation must come from the private sector, the business-friendly environment required for a private fixed investment to flourish has to be expedited. The latest statistics show private capital formation remains at a low ebb and is currently inadequate to support the much higher growth that South Africa needs.”

He says to get the South African economy onto a far higher job-rich growth path, a sense of urgency and consistency is now needed to implement the right remedies and reforms that are required to rebuild business confidence and boost investment.