The dip in the unemployment rate in the Quarterly Labour Force Survey for the third quarter is welcomed, but experts say this is a slight pause before the full impact of US tariffs hit the workforce.
Jee-A van der Linde, senior economist at Oxford Economics Africa, says the decline in South Africa’s unemployment rate in the third quarter was driven by a 1.5% quarter-on-quarter increase in employment and a 4.3% quarter-on-quarter decrease in the level of unemployed people.
He points out that construction and trade were among the industries that recorded the strongest job gains, while manufacturing shed jobs.
“The official unemployment rate dropped to 31.9% in the third quarter, down 1.3% from the previous quarter, which was better than our forecast of 33%. The survey questionnaire was revised in the third quarter and now includes other labour and underutilisation indicators in addition to unemployment.”
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Change to ‘outside the labour force’ instead of ‘not economically active population’
Statistics SA notes that the term ‘not economically active population’ will now be referred to as ‘outside the labour force’, while the ‘potential labour force’ includes people ‘available to work but not seeking’ (including discouraged workers) and people ‘seeking but not available to work’. The combined rate of unemployment and potential labour force decreased by 0.6 percentage points to 42.4%.
Van der Linde says the definitions of the formal and informal sector and formal and informal employment have undergone significant revisions and cannot be compared to previous estimates.
“Meanwhile, the combined rate of unemployment and time-related underemployment (refers to workers who have jobs but want and are available to work more hours than they currently do) decreased by 1.2 percentage points to 34.9%.”
The number of employed people increased by 248 000 to about 17.1 million, while the number of unemployed people decreased by 360 000 to 8 million. Discouraged work-seekers increased by 36 000 and other available potential jobseekers increased by 130 000 to 965 000.
In contrast, the number of unavailable jobseekers increased by 64 000 to 83 000, resulting in a net increase of 230 000 to 4.5 million in the potential labour force population.
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Decrease in unemployment was welcome
Van der Linde says the decrease in South Africa’s unemployment at the start of the second half of 2025 is welcome. “However, given our view of a delayed impact from US tariffs, the labour market will remain under pressure and may weaken over the coming quarters.
“Looking at employment by industry, manufacturing, the sector most exposed to US import tariffs, decreased on a quarterly basis. Meanwhile, recent economic data releases align with our view that the business environment has not yet improved enough for economic growth to pick up meaningfully in the near term.”
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Unemployment could have peaked in SA
Prof. Raymond Parsons, economist at the NWU Business School, says the decrease in the unemployment rate is welcome. “It suggests that, if these positive trends can continue, unemployment may now have peaked in South Africa.
“Although unemployment is still unacceptably high, the current economic recovery is now sufficiently supportive to make a modest dent in the overall unemployment picture. Six of the ten industries tracked by Statistics SA recorded employment gains in the third quarter, while four saw decreases.”
He says there is still a long way to go and no “quick fix” remains for unemployment in South Africa. “But it confirms that the official emphasis in both short- and long-term policies must continue to be strongly on promoting job-rich growth, including in the Medium Term Budget Policy Statement this week.
“Only when the economy reaches the GNU’s more robust 3% medium-term gross domestic product (GDP) growth target will South Africa see an irreversible, sustained large increase in net job creation. An important driver of job-rich growth is higher capital investment and investment as a share of GDP must therefore now increase considerably.”
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