South Africa's Ramaphosa hit by double economic blow

South Africa's unemployment rate has reached a record high, the statistics office said Tuesday, the same day the country's troubled power company reported a billion-dollar loss, piling pressure on President Cyril Ramaphosa's administration.

The news serves as a double blow to Ramaphosa's government, which won May elections vowing to halve unemployment, after Africa's most developed economy has suffered through mass layoffs, rolling blackouts and contracting gross domestic product (GDP).

South African opposition parties lashed out at Ramaphosa and his ruling ANC party over the 29 percent joblessness rate, saying the country had an "unemployment catastrophe" and warning that the situation was getting worse.

The country's statistics agency StatsSA said in its quarterly report that "the unemployment rate increased by 1.4 percentage points from 27.6 percent in the first quarter of 2019 to 29 percent in the second quarter".

"This is the highest level recorded since ...2008," when the quarterly labour force survey was introduced, StatsSA said.

The figure rises to 38.5 percent under the expanded definition of unemployment which includes those who have given up looking for work.

The unemployment figures came as South Africa's power company Eskom -- which generates around 95 percent of the country's electricity -- reported a record net loss of 20.7 billion rand ($1.46 billion) for the year to March, nearly 10 times more than in the previous 12 months.

Eskom imposed a period of rotational power rationing in February, plunging offices, factories and homes into darkness for long hours and negatively impacting business and lulling job creation prospects.

The company has accumulated $30 billion of debt despite multiple bailouts from the government, including 59 billion rand announced last week.

'National crisis'

The ANC won general elections in May with its smallest majority since it led the fight against apartheid rule that was replaced by multi-racial democracy in 1994.

Ramaphosa, who came to power last year, campaigned promising to revive the economy after the scandal-tainted presidency of Jacob Zuma.

Shortly after the election victory, the ANC vowed to halve unemployment to 14 percent in the next five years.

Last month Ramaphosa said the youth unemployment rate, those under 35 years old, was "a national crisis that demands urgent, innovative and coordinated solutions".

But the figures released on Tuesday showed that the youth unemployment rate edged up to 56.4 percent -- nearly double the national average.

Some 49,000 jobs were lost during the second quarter of this year, with the mining, transport, construction trade and banking sectors shedding the most jobs.

South Africa's banks, mining and construction sectors have in recent months signalled mass layoffs as GDP contracted by 3.2 percent in the first three months of 2019, the largest quarterly drop in about 10 years.

'Incredibly worrying'

Analysts say the latest figures did not come as a surprise, primarily due to the slowing economy.

"It was not at all unexpected," said independent labour analyst Terry Bell.

"We are in an incredibly worrying situation globally where more than half of our working population is effectively unemployed and the majority of them are young people under the age of 25," said Bell.

"From a social point of view it is extremely volatile," he said, adding that "we are probably worse off now than we have ever been".

The radical leftist opposition Economic Freedom Fighters decried "the highest number of unemployed people in the history of South Africa".

"The reality is that under the ANC and Ramaphosa's leadership, South Africa's economy will continue to shrink, jobs will be lost, poverty will deepen, the poor will get poorer whilst the rich get richer," the EFF said in a statement.

Mmusi Maimane, the leader of the main opposition party Democratic Alliance, said "the unemployment crisis has now turned into an unemployment catastrophe, with no clear plan from the Ramaphosa government on how to get the economy growing".