[STATEMENT] UNEMPLOYMENT IS WORSENING, REFLECTING FAILURES OF FISCAL POLICY

UNEMPLOYMENT IS WORSENING, REFLECTING FAILURES OF FISCAL POLICY

The Budget Justice Coalition notes with continued concern the latest unemployment statistics for the first quarter of 2026, which saw a quarterly increase in the narrow (not including discouraged job-seekers unemployment rate from 31.4% to 32.7%, and an increase in the broader labour underutilisation rate from 45.7% to 46.3%. Under the expanded definition of unemployment, South Africa has hit 13 million people who are unemployed, underemployed or discouraged by a labour market with no opportunities for them. 

Our unemployment rates represent, to a significant and incontrovertible degree, a direct failure of fiscal policy.

As a Coalition, we have long called for government to place large-scale job creation at the centre of economic policy; this requires mobilising the budget as a tool to confront unemployment, rather than as a victim of the socio-economic challenges facing the country. Instead, the budget continues to place investor confidence and market reassurance above the urgent need to create decent work at scale. For example, the 2026 Budget prioritised consolidation over large-scale employment creation, while millions of South Africans are left to carry the daily hardship of unemployment.

While unemployment tends to increase in Quarter 1 annually, the scale and driving factors of the latest increase reveal clear structural elements which the State must urgently address. The Budget is one of the most important avenues to tackle this critical priority, and our government’s budgetary approach to unemployment is not reaping rewards; on the contrary, a people-centred budget would. 

Persistent and growing inequality

Unemployment is not an equally shared burden. Youth, Black South Africans and women bear the brunt both of the latest increase, and of unemployment generally. 

The narrow unemployment rate for people aged 25-34 increased to 40.6%, and for people aged 15-24 the rate increased to 60.9% quarterly. The labour underutilisation rate increases are even more alarming, now sitting at a massive 53.1% for 25-34 year olds and 73.1% for 15-24 year olds. 

The impact of unemployment is intersectional, as Black South Africans still face by far the highest unemployment rate, with the narrow rate increasing by 1.1 percentage points to 36.4% and the labour underutilisation rate reaching 50.7% this quarter. 

Young women continue to be significantly more likely not to be in education, employment or training (NEET) than young men, with the NEET rate increasing by 1.7 percentage points for young women, compared to a 0.7 percentage point decrease for young men. In essence, young women are increasingly being pushed away from the labour force.

The growing percentage of young people who are NEET show the challenges young people face in accessing opportunities. The youth experience is not homogenous and research shows how challenges in completing education, the cost of looking for work, the precarity of self employment, the lack of social connections all play a role in detaching young people from sustainable economic activity.

From Q1:2016 to Q1:2026, the number of unemployed persons in South Africa increased from 5,7 million to 8,1 million, while the proportion of those in long-term unemployment increased from 64,9% to 77,4% over the same period. Long-term unemployment accrues the impact of unemployment, with individuals losing their skills by not practicing them, and tearing social cohesion and the glue that keeps our com.

The State cannot speak in the abstract about unemployment. It is damaging for our whole economy, but it harms South Africans disproportionately based on age, race and gender, calling for targeted interventions.

Unemployment is a structural failure

Each quarter, as South Africans continue to suffer obscene rates of unemployment, we are told how multifaceted and complex the crisis is. While addressing it certainly requires comprehensive and often complex interventions, we reject this being used as a smokescreen to obfuscate the very clear structural drivers of unemployment in South Africa. 

Each year, we watch as continued austerity causes, and at times even demands, the deprioritisation and defunding of both basic and higher education and training, youth employment initiatives and social protection programmes. When young people are denied the skills they need to access employment, the positions they are ready to fill, and the social protection they need to continue searching for opportunities, the results we see are still shocking, but are not surprising. 

SA and the crisis of missing jobs

Seven out of the 10 sectors measured by Statistics SA’s QLFS lost jobs in the first quarter, compared with the previous quarter. Employment increased in the Manufacturing, Mining and Agriculture industries. However, the largest decreases were recorded in the Community and social services, Construction and Transport industries. When it comes to social services, it’s critical to note that Public Employment Programmes received deep budget cuts in the 2026 National Budget – funding for the Basic Education Employment Intervention, South Africa’s largest youth employment programme with teacher assistants placed in all public schools across the country, only included project management fees; this means losing nearly 200 000 positions for young people to support teachers in schools. 

Responding to comments to the Special Appropriations Bill, National Treasury DDG Ulrike Britton said that the remaining funding would be allocated from the Labour Activation Programme (LAP) but the decision process from LAP was not disclosed. Additionally, as we near the middle of the year it’s unclear if Phase 6 of the BEEI will be implemented, taking away opportunities for young people, and much needed support for teachers in public schools. The BEEI programme should be funded on a predictable, multi-year basis rather than as a temporary or emergency intervention. 

The same applies to leveraging and expanding Public Employment Programmes, which are labour intensive and focus on the creation of community assets. The Expanded Public Works Programme, the Community Works Programme and the Presidential Employment Stimulus, which have demonstrated the ability to reach large numbers of unemployed people, especially in economic desert areas, with limited economic activity. 

In this sense, long term funding commitments are critical to ensure dignified stipends and effective programme duration. Evidence from programmes demonstrate their ability to meet the growing income support  for households while the impact in strengthening state capacity and building the social infrastructure: contributing to community services, environmental  rehabilitation, and local infrastructure maintenance. 

At the same time, a broader public employment strategy should include the large-scale hiring of essential public service workers, including doctors, nurses, teachers and community health workers. Many public facilities face critical staff shortages despite the presence of trained professionals who remain unemployed or underemployed. Strategic investment in expanding the public workforce would both strengthen the delivery of essential services and create meaningful employment opportunities, particularly for young people entering the labour market.

A people-centred budget offers solutions.

A credible employment-centred growth strategy requires a more deliberate alignment between fiscal policy and labour absorption. This includes significantly expanding employment-intensive public programmes, increasing investment in infrastructure maintenance and basic services that generate local jobs, and strengthening sectors such as early childhood development and community health that both create employment and support broader social and economic participation. These interventions are not only socially necessary but can also have strong fiscal multipliers by raising demand and improving long-term productivity.

As such, the Coalition calls on Government to:

1. Bring back and expand the Basic Education Employment Initiative as it creates jobs for young people and gives schools the support they need to function better. 
2. Scale public employment programmes like the Expanded Public Works Programme and Presidential Employment Stimulus as they provide income support while improving community services, environmental care and local infrastructure. The expansion needs to include a focus on offering longer contracts and dignified wages.
3. Hire more doctors, nurses, teachers and community health workers to achieve the triple dividend of addressing staff shortages, improving public services and creating meaningful jobs. 
4. Invest more in public infrastructure projects and routine maintenance, especially in under-served rural areas and secondary towns, to create jobs, improve services and reduce spatial inequality 
5. Invest in labour-intensive sectors such as care work, early childhood development, community health, agriculture and agro-processing to create jobs while strengthening social services and food systems. 

The State has an opportunity to engage honestly and meaningfully with this crisis. South Africans, especially our youngest, cannot afford another quarter of deflection, nor do they deserve it.

[ENDS]

 

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