[Letter] Public sector growth masks private firms’ struggles

In the fourth quarter of 2015 South Africa’s expanded unemployment rate (the measure that includes discouraged job seekers) was 33.8%. For the youth category the rate stood at 63.1%.

Since the fourth quarter of 2025 the former measure had increased to 42.1% (versus 41.9% in the fourth quarter of 2024), and the latter to 68.3%. Thus, while the official unemployment rate improved from 31.9% in the third quarter of 2025 to 31.4% in the fourth, the employment reality remains exceedingly harsh and unforgiving. While that is the lowest it has been in the past five years, it is still above the pre-Covid-19 rate of 29.1%, recorded in the fourth quarter of 2019.

Of the sectors that boosted employment from October to December 2025 the biggest gains were by community and social services (46,000) — mostly government — construction (35,000) and finance (32,000). Trade lost 98,000 and manufacturing lost 61,000.

Should this pattern persist it will indicate South Africa’s “economic turnaround” and improved unemployment picture is due mostly to public sector stability and growth, not private sector, capital-intensive sectors, the improvement of which would indicate a real, substantive, improved long-term economic trajectory.

Two provinces that are vital for South Africa’s overall economic prospects, Gauteng and KwaZulu-Natal, shed 54,000 and 41,000 jobs, respectively. These two provinces are home to about 45% of the country’s population. Given its industrial heft, Gauteng’s performance is especially concerning.

By contrast, the Western Cape recorded the lowest provincial unemployment rate of 18.1%, as well as adding the most jobs of any province: 93,000 quarter on quarter, almost as many as Gauteng and KwaZulu-Natal lost.

Letter originally appeared here.