The number of claims from the unemployment insurance fund will rise sharply in the coming quarters, according to Investec Group economist Kgotso Radira.

He was commenting after the release on Thursday of Statistics SA's quarterly Labour Force Survey which showed the official jobless rate increased from 23.6 percent to 24.5 percent for the third quarter of 2009.

Radira said the survey also highlighted the impact of the recession on consumer spending but more importantly on consumer confidence, key for recovery.

"Consumers will continue to remain cautious for longer, postponing purchases of large ticket items."

As economic activity was still expected to be weak in the fourth quarter of 2009, further job losses could be expected. This would bring the total jobs lost for 2009 to one million, he said.

"We see the unemployment rate rising further in the coming quarter to around 26 percent by the first quarter of 2010.

"The expected slow and uneven recovery will likely result in the SA Reserve Bank keeping interest rates low for most of 2010."

Radira said the government's second phase of the public works programme would have to be implemented urgently, but it was unlikely to fully absorb the rising number of job seekers.

"Government will have to come up with policies that support entrepreneurship in industries that are labour intensive and improve skills development."

Congress of SA Trade Unions spokesman Patrick Craven said the rise in unemployment was a result of "mistaken policies" between 1996 and 2004.

"(Policies) of cutting tariffs and privatising basic services, combined with a failure to restructure the economy, and in particular the totally inappropriate monetary policies pursued in those years, centred on the pursuit of the misguided belief in inflation-targeting," he said in a statement

"All our warnings about these false policies were ignored, and now the problems they have caused coincide with a world economic crisis and the chickens are coming home to roost."

The Stats SA survey showed the number of employed people fell by 484 000 to 12.8 million.

Craven said this meant 4.1 million South Africans were now without work.

"And that rises to 4.7 million if you add the 510 000 who have given up even looking for a job, or have opted out of the labour force completely."

The more realistic expanded definition of unemployment, which included those people that had given up looking for work, climbed from 32.5 percent to 34.4 percent in the same period.

"But of particular concern is that the key manufacturing sector shed 150 000 jobs, equivalent to eight percent of total jobs for the industry," said Craven.

The wholesale and retail trade lost 110 000 jobs.

"These statistics prove that we remain in the midst of a national unemployment emergency. But it is more than that. They reveal a fundamental structural problem in the economy, an economy which is being de-industrialised."

Sapa

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