BUSINESS NEWS - As 2025 goes by, South Africa’s labour market rang alarm bells, with indicators pointing to mounting pressure on both the supply and demand sides of employment. 

Still grappling with the aftermath of the pandemic, a sluggish recovery in key sectors, and unstable business confidence, the country faces historically high unemployment — hitting young people and vulnerable regions the hardest.

In the first quarter of 2025, Statistics South Africa (StatsSA) reported an official unemployment rate of 32.9%, raising one percentage point from the end of 2024. This increase exceeded analysts’ expectations, who had forecasted a modest 0.2% rise. 

As is typical early in the year, the loss of seasonal jobs from the festive period was compounded by the influx of recent graduates and school leavers into the job market — a surge in work force supply that businesses were unable to absorb.

According to the Quarterly Labour Force Survey (QLFS) covering January to March 2025, the number of employed people dropped by 291,000 — from 17.1 million in Q4 of 2024 to 16.8 million at the end of March. 

Simultaneously, the number of unemployed individuals rose by 237,000, bringing the total to 8.2 million. Additionally, 54,000 people stopped actively looking for work, slightly reducing the economically active population and indicating a 0.2% contraction in the labour force.

The expanded unemployment rate — indicator that includes discouraged jobseekers and other inactive people who would like to work — also deteriorated, rising 1.2 percentage points to 43.1%. 

The number of discouraged jobseekers increased by 7,000 (0.2%), while those not economically active for reasons other than discouragement grew by 177,000 (1.4%). Together, this raised the number of people outside the labour force by 184,000 to 16.7 million.

Job losses vary across sectors. Trade and construction were hardest hit, losing 194,000 and 119,000 jobs respectively. These were followed by declines in private households (-68,000), community and social services (-45,000), and mining (-35,000). On the upside, a few sectors showed gains: transport added 67,000 jobs, finance 60,000, and public utilities (electricity, gas, water) 35,000.

However, these gains were insufficient to offset the overall downturn. Formal employment shrank by 245,000 jobs, while the informal sector saw a minor increase of just 17,000. This reflects growing job insecurity, as many of the new informal positions lack stability and social protections.

Reports also highlights regional disparities. Western Cape led the way by creating 49,000 jobs in the first quarter, followed by Gauteng (9,000) and Free State (4,000). In contrast, KwaZulu-Natal saw the sharpest decline (-104,000), followed by Eastern Cape (-83,000), North West (-57,000), Limpopo (-55,000), Mpumalanga (-43,000), and Northern Cape (-12,000).

Education remains a key determinant of employment. The unemployment rate among individuals without a matric certificate stood at 39.0%, compared to just 11.7% for those with a university degree. 

However, even graduates saw an increase of 3.0 percentage points from the previous quarter — highlighting the difficulty even skilled professionals face in the current market.

Labour force participation stood at 60.0%, down from the final quarter of 2024. The absorption rate — which measures the percentage of the working-age population that is employed — fell to 40.3%. Both indicators reflect the economy’s declining ability to integrate new workers or retain those losing jobs, perpetuating a cycle of reduced activity and increased demand for social support.

Authorities and analysts are calling for urgent action. On one hand, infrastructure investment and support for small and medium-sized enterprises — traditionally engines of job creation — are seen as key. On the other, expanding access to personal credit could also help boost consumption and support budding entrepreneurs.

Equally important is investment in technical and professional education, alongside public-private partnerships to upskill youth and align education with market needs. However, implementation remains sluggish, and business confidence continues to be undermined by load shedding, public debt, and recurring social unrest.

Youth Employment context

South Africa’s young people are facing an increasingly bleak job market. While they represent over half the working-age population — 50.2%, or about 20.9 million people aged 15 to 34 — they also suffer the highest and most persistent unemployment rates. 

The situation is particularly dire for youth aged 15 to 24, many of whom are entirely excluded from the formal job market.

StatSA’s latest QLFS confirms a worsening trend within the last decade. In 2015, the youth unemployment rate stood at 36.9%; by 2025, it had soared to 46.1%. Among 15- to 24-year-olds, the rate jumped from 50.3% in 2015 to 62.4% in 2025. For those aged 25 to 34, it rose from 31.4% to 40.4%.

Geographic inequality makes matters worse. In less developed provinces, the picture is even bleaker. In North West, youth unemployment sits at 58.8%, with only 43% of young people participating in the labour market. In Eastern Cape, unemployment is 54.3%, and participation is below 40%.

Gender also remain as an important factor, considering young women face additional challenges. Among 15- to 24-year-olds, 37.1% are classified as NEETs (Not in Employment, Education or Training), with women representing 37.5% of that group — slightly higher than men at 36.7%. In the broader 15 to 34 age bracket, 45.1% of youth are NEETs, with 48.1% of women affected compared to 42.2% of men.

A particularly troubling trend is growing discouragement. Around 1.9 million young people have given up actively searching for work — more than the 1.5 million adults aged over 35 in the same position. Alarmingly, 58.7% of the 4.8 million unemployed youth have never held a job, trapped in a cycle where lack of experience hinders employment, and lack of employment prevents gaining experience.

Education plays a crucial role in shaping job prospects. Among youth without a matric certificate, unemployment is 51.6%. Those with only matric face a 47.6% rate. But vocational training lowers that figure to 37.3%, while university graduates face an unemployment rate of just 23.9%. Though education is no guarantee, it significantly reduces the likelihood of joblessness.

When employed, young people are concentrated in low-skilled sectors. Retail and hospitality (trade) account for 24.5% of youth jobs, followed by community services (19.8%), finance (18.4%), and manufacturing (10.5%). 

Occupationally, youth tend to be employed in elementary work (25.3%), sales and service roles (20%), clerical positions (13.5%), and manual trades (11.2%). The dominance of low-skill roles underscores the precarious nature of youth employment.

South Africa faces a structural crisis in youth employment. Beyond rising unemployment, the crisis is fuelled by regional inequality, gender gaps, a growing NEET population, and mismatched skills. 

Experts agree that addressing this challenge requires an integrated approach — including technical skills development, robust public-private partnerships, and targeted interventions in the most affected regions.

Without meaningful reform, millions of young South Africans risk being permanently excluded from a dignified labour future.

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