Why South Africa’s 33.7% unemployment rate does not tell the whole story

Ask AI 7minThe official unemployment rate increased slightly from 33.6% in the second quarter to 33.7% in the third quarter.

The official unemployment rate increased slightly from 33.6% in the second quarter to 33.7% in the third quarter.

While many loosely translate this to ‘1 in 3 people do not have a job’, it’s worth breaking down the statistics.

South Africa’s official unemployment rate does not include everyone who is without a job, and millions of people falling into a separate category because they are not actively looking for work or do not meet the criteria used to classify someone as unemployed.

The distinction is important when interpreting the country’s unemployment statistics, particularly as the latest figures show that 8.6 million people are officially unemployed, while a further 17 million are classified as being outside the labour force.

According to Statistics South Africa’s (Stats SA) Quarterly Labour Force Survey (QLFS) for the third quarter of 2026, released on Tuesday, the official unemployment rate increased slightly from 33.6% in the second quarter to 33.7% in the third quarter.

The number of employed people increased by 101,000 to 16.8 million, while the number of unemployed people grew by 97,000 to 8.6 million.

However, the figures also show that 17 million people were outside the labour force, including 3.7 million discouraged work-seekers.

We look at how these groups are classified, which helps explain why the official unemployment rate does not necessarily capture the full extent of South Africa’s employment challenges.

Stats SA divides the working-age population, which for the headline QLFS figures covers people aged 15 to 64, into three broad categories: employed, unemployed and people outside the labour force.

The Quarterly Labour Force Survey is a household-based survey that measures people’s participation in the labour market. Stats SA also makes its survey methodology, concepts and definitions available in its QLFS documentation.

Employed people are those who have worked for at least one hour during the survey’s reference week, or who have a job or business but were temporarily absent from work.

This category includes people working in the formal and informal sectors, as well as those who are self-employed.

Unemployed people are those who do not have a job, are available to work and have actively taken steps to find employment during the reference period. There are also specific provisions for people who have already secured a job or business that they are due to start.

People outside the labour force, also commonly described as economically inactive, are those who are neither employed nor classified as unemployed under the official definition.

This category can include students, retired people, homemakers and people who are unable to work, as well as people who want employment but do not meet the criteria for being officially unemployed.

The distinction means that not everyone without a job is counted in the unemployment statistics.

For example, someone who has lost their job and is actively applying for positions would generally be classified as unemployed.

However, someone who has stopped looking because they believe there are no jobs available may be classified as a discouraged work-seeker and placed outside the labour force.

One of the most important distinctions in the unemployment statistics concerns discouraged work-seekers.

These are people who want to work and are available for employment but have stopped actively searching for a job, often because they believe there are no suitable employment opportunities available.

Although they are without work and would like to be employed, they do not meet the official criteria for unemployment because they are no longer actively looking for work.

Stats SA includes discouraged work-seekers in the potential labour force, rather than the officially unemployed population.

In the third quarter of 2026, the number of discouraged work-seekers increased by 70,000 to 3.7 million.

The number of other available job-seekers decreased by 1,000 to 860,000, while unavailable job-seekers remained unchanged at 44,000.

Together, these groups make up the potential labour force, which increased by 69,000 to 4.6 million during the quarter.

Stats SA describes this group as people who are available but not seeking employment, or who are seeking employment but are unavailable to start work.

A further 12.4 million people were outside the labour force for other reasons.

This brought the total number of people outside the labour force to 17 million, a decrease of 82,000 compared with the previous quarter.

The official unemployment rate is calculated using the number of unemployed people as a proportion of the total labour force.

The labour force consists of employed people and unemployed people who meet the official criteria.

It does not include people outside the labour force, including discouraged work-seekers.

In the third quarter of 2026, South Africa had approximately 16.8 million employed people and 8.6 million unemployed people.

This brought the total labour force to approximately 25.4 million.

The 8.6 million unemployed people therefore represented 33.7% of the labour force.

The additional 17 million people outside the labour force are not included in this calculation.

8,578,000 unemployed people divided by the total labour force of 25,418,000 (16,840,000 employed + 8,578,000 unemployed), multiplied by 100, which equals approximately 33.7%.

This is why the official unemployment rate should not be interpreted as the percentage of all working-age South Africans who do not have jobs.

Stats SA also publishes alternative measures of labour underutilisation to provide a broader picture of the challenges facing the labour market.

These are known as LU1, LU2, LU3 and LU4.

The measures take into account different groups of people who are unemployed, underemployed or have some attachment to the labour market but are not included in the official unemployment figure.

LU1 – 33.7%: The official unemployment rate. This measures people who do not have jobs, are available to work and have actively looked for employment.

LU2 – 36.5%: This includes the officially unemployed as well as people who already have jobs but want to work more hours and are available to do so.

LU3 – 44.0%: This includes officially unemployed people as well as those in the potential labour force, such as discouraged work-seekers who want jobs and are available to work but have stopped actively looking.

LU4 – 46.3%: This is the broadest measure. It includes unemployed people, those who want to work more hours, and people in the potential labour force.

LU1 is the official unemployment rate and measures people who are unemployed according to the standard definition.

LU2 combines unemployment with time-related underemployment. This includes people who are employed but work fewer hours than they would like and are available to work additional hours.

LU3 combines officially unemployed people with those in the potential labour force. It therefore includes discouraged work-seekers and other people with some attachment to the labour market who are not counted in the official unemployment rate.

LU4 is the broadest of the four measures. It combines unemployment, time-related underemployment and the potential labour force, measured against the extended labour force.

The difference between LU1 and LU3 is particularly notable.

While the official unemployment rate stood at 33.7%, the combined rate of unemployment and the potential labour force was 44%.

Stats SA’s Q3 presentation highlighted the 10.3 percentage-point gap between these two measures as an indication of unmet demand for employment among the working-age population.

It is important to understand that these measures are complementary indicators, rather than seeing them as interchangeable unemployment rates. Each captures a different degree of labour-market underutilisation.

The latest figures illustrate why looking at the official unemployment rate alone does not provide a complete picture of the country’s labour market.

Although employment increased by 101,000 during the third quarter, unemployment also increased by 97,000.

The number of people participating in the labour force grew by 198,000, or 0.8%, meaning that more people entered or participated in the labour market than the number of additional jobs created.

Stats SA also reported that the number of people outside the labour force declined by 82,000 to 17 million.

The formal sector recorded an increase of 268,000 jobs to 12.3 million. However, employment in the informal sector declined by 98,000, while the household sector lost 68,000 jobs.

The finance industry recorded the largest employment increase, adding 111,000 jobs, followed by manufacturing with 33,000 and mining with 31,000.

The largest employment declines were recorded in private households, agriculture and construction.