An improvement in South Africa’s formal employment numbers towards the end of last year masked a trend of job losses in the informal sector, said Stats SA in a recent note.
In the fourth quarter of 2025, South Africa’s unemployment rate fell to 31.4% from 31.9% in Q3, its second consecutive decline, thanks to the addition of 320,000 jobs in the formal labour market.
However, the formal employment gains were nearly matched by a 293,000 decline in informal jobs, which account for about a third of all employed people and half of employed young people (aged 15-24) captured in the headline unemployment statistics.
The findings highlight the significant role informal jobs play in South Africa’s labour market, and come at a time when a debate about the role of informal employment has seen statisticians fine-tuning the country’s measure of joblessness in recent months.
Business Day reported last year on a call by former Capitec CEO Gerrie Fourie for SA to rethink its unemployment metric, contending that the headline figure of 32.9% could be closer to 10% when the vast informal sector is taken into account.
Fourie met with statistician-general Risenga Maluleke, minister in the Presidency Khumbudzo Ntshavheni and senior National Treasury officials in July to discuss his thoughts on the informal sector.
In August, Stats SA revised its definition of the informal sector to be based primarily on whether businesses are registered for VAT or income tax, making the size of the enterprise no longer its main metric.
This move, which aims to align South Africa with the latest international standards, expanded the basket of businesses included in the informal sector.
In Q3, the first release after the revision, Stats SA put the number of people employed in the informal economy at 4-million, significantly above previous estimates, valuing it at about R900bn annually.
While better capturing the informal sector provides a more nuanced view of South Africa’s labour market and the health of its economy, the concern is that it downplays the inherent instability of informal work.
Informal workers, according to Stats SA’s definition, lack access to essential employment protections, including social insurance like pensions, paid annual and paid sick leave — “regardless of whether they work in the formal or informal sector”.
Stats SA said the number of informal job losses in the last three months of 2025 show how sensitive the informal sector is to shifting economic conditions, highlighting the sectors where workers face the greatest instability.
Most of the informal job losses in Q4 came from the trade sector, which shed 100,000 informal jobs. Agriculture followed with 79,000 fewer informal sector jobs, while manufacturing and finance lost 58,000 and 39,000 informal workers.
Business Day
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