SOUTH Africa could face another round of job losses as the recession further damages consumer demand, Economic Development Minister Ebrahim Patel said yesterday.
More job losses could place additional pressure on President Jacob Zuma, elected with strong union support, to fulfil promises to create 500000 new jobs by December as a wave of union strikes and higher-than-inflation settlements rock the economy.
"As retrenchments and job losses increase, they impact on consumption, leading to lower demand which can result in a renewed round of job losses," Patel told Parliament.
He said employment data has shown a large increase in unemployment with 179000 jobs lost in the first three months of the year, and another 267000 in the following three months.
South Africa has a stubbornly high unemployment level of 23,6 percent. The jobless rate jumps to more than 30 percent including people who have given up looking for work.
Africa's strongest economy has shrunk for three consecutive quarters, with data this week showing an annualised 3,0 percent quarter-on-quarter fall in the second quarter, after Q1's 6,4 percent decline.
Analysts say the figure raises hopes that the worst of the country's first recession in 17 years may have passed, but officials have warned the recovery may lag behind other economies.
"The international economic crisis and the local recession threatens to wipe out our economic gains," Patel said.
Zuma has promised to create 500000 temporary jobs this year as part of a labour-intensive public works programme. - Reuters