Is South Africa's labour market finally stabilising? Unemployment trends analysed
While the labour market remains weak, at least it is no longer deteriorating.
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South Africa’s official unemployment rate declined in the fourth quarter of 2025, extending its recent easing trend – pointing to stabilisation rather than deterioration of the labour market.
The survey, released on Tuesday, recorded the official unemployment rate at 31.4%, down from 31.9% in the third quarter. The number of unemployed South Africans fell by 172,000 to 7.8 million.
At face value, the data suggests steady progress. However, the broader labour market dynamics tell a more nuanced story.
While employment increased by 44,000 people to reach 17.1 million people in jobs, the labour force itself shrank by 128,000 citizens. At the same time, the number of South Africans classified as outside the labour force rose by 248,000.
This combination indicates that part of the decline in unemployment was driven by fewer people actively participating in the labour market.
The labour force participation rate slipped to 59.3% during the quarter, highlighting the continued presence of discouraged work-seekers.
Nolan Wapenaar, co-chief investment officer at Anchor Capital, said the decline in unemployment should be viewed as incremental rather than transformative.
The modest decline in unemployment is “incremental rather than transformative,” said Wapenaar.
“Still, it confirms that employment momentum has stabilised after a weak start to 2025, and broad-based participation suggests the recovery is not confined to a single industry, improving the quality of the improvement.”
Sectoral data points to both progress and pressure within the economy.
Seven of the ten industries tracked recorded employment gains, with community and social services, construction and finance leading the increases. Agriculture also posted gains.
However, manufacturing shed 61,000 jobs over the quarter, while trade and mining also recorded employment losses. Manufacturing remains one of the most significant drags on job creation.
Provincial trends further underscore the uneven recovery.
The Western Cape added 93,000 jobs – the strongest performance nationally – while Gauteng recorded a decline of 54,000. KwaZulu-Natal and Eastern Cape also saw employment contract.
Wapenaar said structural constraints continue to limit the pace of labour market recovery.
At the same time, joblessness disproportionately impacting vulnerable groups, especially the youth and long-term unemployed, said Wapenaar.
Although unemployment among those aged 15 to 24 improved slightly during the quarter, Statistics South Africa’s data shows that 34% of young people remain not in employment, education or training – a deterioration compared with a year earlier.
Delivering SONA in Cape Town in the middle of the month, President Cyril Ramaphosa said “it is a matter of national concern that too many South Africans remain unemployed, and too many young people struggle to find their first job”.
Ramaphosa said “that is why, as we rebuild the economy, we are creating work and livelihood opportunities on a large scale through public and social employment programmes”.
The President said that “as the economy grows, the rate of unemployment is starting to decline”.
Investec economist Lara Hodes stated that “vulnerable youth, comprising those aged 15 to 24, remain the most disadvantaged segment when it comes to finding sustainable employment”.
Hodes noted that, although unemployment within this category of the population improved further over the quarter, it remains at a critical level.
That said, Wapenaar said the latest labour force survey data points to stabilisation rather than deterioration.
Unemployment is trending lower, sectoral participation is broadening, and growth expectations at the margin are improving. “While the labour market remains weak, at least it is no longer deteriorating,” said Wapenaar.
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