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Economist SA article uses jobs statistic unfairly

The recent Economist cover story on South Africa, which has riled many South Africans, unfairly uses an unemployment figure not used elsewhere, to paint a gloomy picture of the country.

Researched by Ruth Becker

In its article, The Economist paints a dire picture of the state of South Africa’s economy, focusing on the problem – widely seen as one of the most serious now facing the country – of unemployment.

To most South Africans, there is no harm in pointing out the unemployment and other problems. Everyone acknowledges the challenges they present. The issue that has riled many, however, is the way the numbers are presented. Here’s why.

Presenting two sets of numbers

Take the jobless total. Under the heading “Gathering gloom” the article declares the country’s unemployment rate, “officially 25%, is probably nearer 40%”.

If true, it would appear that the jobless total in South Africa – which all agree is bad – is a lot worse than in other countries with rates well below 40 percent.

And by implication, it suggests that the state-run statistics agency StatsSA, which recently reported an unemployment rate of 24.9 percent, is presenting “official” numbers that belie the true picture. Other statistics too would appear to be suspect.

So where do the numbers come from?

The StatsSA number is calculated, based on a standard measure set out for governments worldwide by the UN’s International Labour Organisation (ILO), the world authority on labour market statistics.

Using this measure, StatsSA defines an unemployed person as someone who did not do any work or have a job during the period, took active steps to look for work or start a business in the previous four weeks and was available to take employment.

“Anybody who satisfies all the three conditions is unemployed,” Peter Buwambo, executive manager of labour statistics at Stats SA told Africa Check.

So why did The Economist suggest the real total is “nearer 40 percent”?

One interpretation could be that they were quoting the leader of the opposition Democratic Alliance, Helen Zille, who also spoke last month of “broadly defined” unemployment standing at around 35%.

In fact, dig into the StatsSA figures and it appears that both Zille and possibly The Economist were referring to what StatsSA calls its “expanded rate” of unemployment which is at 36.2% in the last quarter.

This definition includes people who do not have a job and are available to work but did not take active steps to look for work or start a business in the period.

This definition recognises that “some people want to work but they do not look for work because of various reasons ranging from discouragement to lack of money for transport to look for work etc,” Buwambo said.

So which measure is better?

According to Martin Wittenberg, Professor in the School of Economics at the University of Cape Town, both measures have their uses.

“I don’t think there is a clear right or wrong here. The official (ILO) definition restricts the unemployed to active searchers. (But) The fact is that those who are not searching are still a political problem and would presumably start searching if the economy were to pick up,” Wittenberg told Africa Check.

“In my mind the broad definition is more useful if one is thinking about the scale of the social problem, while the narrow definition is more appropriate if you want to do international comparisons.”

Conclusion

In other words, when you know how things are calculated here and around the world, the problem with those who use the 35-36 percent number from StatsSA – and even round it up to nearly 40 percent in the Economist’s case – is not the number itself but the presentation.

As the old media saw has it, The Economist appears to have picked the facts to fit its story.

Edited by Peter Cunliffe-Jones. Additional research by Ntombi Dyosop.

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