Patterns of new work for those economically impacted during COVID-19

GCRO’s Quality of life survey 6 (2020/21) shows that 11% of all respondents lost a job since March 2020, and 4% were forced to permanently close a business. Encouragingly, not all working age respondents who lost jobs or closed businesses during the COVID crisis stayed without work – at the point of interview 44% had regained employment. However, as discussed in more detail here and here, both the loss of livelihoods and the recovery of work have been unevenly experienced across race, sex, education levels and income groups. In this Vignette we dig deeper into the nature of employment of those who have recovered work after losing jobs or closing businesses, in comparison to those who were not impacted in the same way. This Vignette should be read together with Vignette 42 which looks at changing dynamics of entrepreneurship over the first year of COVID-19.

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On 30 November 2021, Statistics South Africa (StatsSA) issued its third quarter Labour Force Survey (LFS) for the year. The LFS revealed that the unemployment rate (on the strict definition) had risen to 34.9% for South Africa for the period July-September 2021. The unemployment rate for Gauteng for the same period stood at 37% on the strict definition, and counting in discouraged work-seekers, the expanded rate of unemployment for the province was 44%. The equivalent figures for the same quarter in 2019, before the COVID-19 crisis struck, were 31% unemployed on the strict definition and 34% on the expanded definition.

There is no question that the COVID-19 period has had a dramatic negative impact on the Gauteng economy. The LFS data aligns with that from the GCRO's own Quality of Life Survey 6 (2020/21), which showed that for respondents interviewed between October 2020 and May 2021, significant proportions had lost livelihoods due to job losses, reduced salaries and working hours, and permanent business closures. However, the QoL data also shows that of those of working age who had lost jobs or closed businesses, some 42% were working again at the time the interview was conducted. Another 2% were waiting to start jobs. This is equivalent to the percentage of respondents employed (46%) who had not been economically impacted.

While this seems oddly encouraging at first glance it needs to be put in context. First, a very high proportion of those who had lost jobs or closed businesses were still in the labour market, unemployed and looking for work. Some 49%* of those economically impacted were looking for work, and only 5% were no longer in the labour market. This compared to 34% looking for work and 17% not in the labour market of those not economically impacted.

Second, the QoL data is also able to tell us something about the kind of work that those who were economically impacted had now been able to find since losing livelihoods. When this new employment for those impacted is compared to the employment of those not impacted, serious concerns emerge:

• Only 48% of those economically impacted during the first year of COVID-19 now work in the formal sector, compared to 68% of those not impacted.
• Only 52% of those impacted now work full time, compared to 77% of those not impacted.
• 57% of those impacted are self employed, compared to just 28% of those not impacted.
• Only 56% of those impacted are now satisfied with the working conditions in their jobs, compared to 71% satisfied for those not impacted.

For the first time, the Quality of Life Survey asked respondents for information about their occupations. Comparing the current occupations of those who had lost jobs or closed businesses with that of those who were not impacted also gives cause for concern. In overall terms those impacted now have occupations that are lower on the skills and wage spectrum than those not impacted.

The data on the new employment of those who lost jobs or closed businesses after March 2020, compared to the employment of those not so impacted, needs careful interpretation. It is possible that new employment is aligned with the kind of work those impacted had before COVID-19, showing where the downturn hit the hardest. For example, on the understanding that people will have much the same jobs before and after, the higher proportion of those impacted who say they work in crafts & trades and elementary occupations may mean that the shock affected these job categories more. The 2021 third quarter LFS similarly suggests that across South Africa the occupations that saw the largest declines in total employment were sales & service workers (-29% between the third quarters of 2019 and 2021) and crafts & trades (-25%). By comparison, the total number working as managers dropped by -7% and professionals by -2% (see QLFS Trends 2008-2021Q3 excel sheet here)

However, it is much more likely that the data reflects the kind of livelihoods that those impacted by job losses and closed businesses have since been able to find, regardless of what they did before. This new work for those impacted by job losses and business closures is relatively much more precarious and low-skill than is typical for the rest of the labour market – with a much higher share being self-employed, informal, part time, and dissatisfied with their working conditions.

*Note that this is not an unemployment rate.