The Q1 quarterly labour force statistics for 2026 are both revealing and concerning.
They indicate the economy is stuck, hindered by internal issues and external geopolitical challenges.
The number of discouraged job seekers has increased by 171,000 to 3.7-million.
Unfortunately, 345,000 workers lost their jobs in the first three months of this financial year.
They will now join the ranks of economic outcasts, as they cannot meaningfully participate in the economy.
The manufacturing sector in the Eastern Cape is facing challenges due to deindustrialisation.
Nationally, the manufacturing sector lost 127,000 jobs year on year, with the Eastern Cape’s auto hub being the main casualty.
The expanded unemployment rate in the Eastern Cape has surged to 63.1%, straining the automotive hub as it faces global changes and local political instability.
The Cities Economic Outlook 2026 highlights that job growth in metros is now trailing behind non-metro areas for the first time in a decade.
In the public sector, 206,000 jobs were lost in the first quarter.
This is a direct result of the National Treasury’s approach to fiscal management.
In construction, high interest rates at 10.5% and delayed municipal tenders have halted projects.
In manufacturing, while SA saw a slight quarterly increase, it has lost 127,000 jobs year on year.
This situation is worsened by SA’s focus on exporting raw materials while losing processing capabilities.
These alarming unemployment trends are closely linked to government failures and are built on three pillars: the government’s strict adherence to fiscal prudence, trade liberalisation and inflation targeting.
The government has prioritised debt reduction and deficit control above all else.
Public sector job losses of 206,000 occur because the state is trying to balance the budget while the economy suffers.
Since 1994, SA has aggressively reduced tariffs to integrate into the global economy.
The result has been the decline of local manufacturing in textiles, steel and engineering while favouring cheap imports.
By maintaining high interest rates to control inflation, the SA Reserve Bank has effectively prioritised the value of the rand and financial interests over the survival of the construction sector.
Even with the economy showing a marginal stabilisation of 1.6%, it is still jobless growth.
The neoliberal model assumes that fixing the macroeconomic environment will lead to private sector hiring.
The unemployment rate of 32.7% demonstrates that this trickle-down approach is nonexistent in a structural crisis.
The economy has shifted from production to capital movement.
While the financial sector gained 32,000 jobs this quarter, production sectors such as manufacturing and construction are collapsing.
Neoliberalism relies on market forces to dictate where people work and live.
In SA, this has left provinces like the Eastern Cape with a staggering 44.6% unemployment rate, situated in labour reserves with no industrial prospects.
For 32 years, the political offer has been based on redistribution through the state, which is a good idea but is not implemented aggressively enough.
The expectation was that a growing state would employ people, provide grants and manage the economy.
Provinces like the Eastern Cape illustrate the failure of this model.
Economic outcasts must demand a new political offer that emerges from the periphery rather than the centre.
This new offer should promote economic freedom as the next step toward liberation.
The government is tackling significant issues like Eskom, Transnet, and the Greylist, but it has not addressed smaller, crucial matters such as labour laws, small business licences and township zoning.
The new political offer should shift from centralised industrial policies to localised economic zones.
If a municipality in the North West is struggling, the new offer would allow it to establish its own minimum wage or tax incentives to attract investment, enabling competition with other provinces.
Currently, participating in the economy requires state permission for licences, zoning and complex labour laws.
The new social contract must recognise the right to trade as a fundamental human right.
The construction mafia poses a significant threat to economic outcasts as it undermines projects that could provide entry-level jobs.
Those on the margins of the economy should demand substantial state-led investments in rail and energy, targeted support for local textiles and steel, and a basic income grant to encourage entrepreneurship.
Let metros establish their own labour or growth regulations.
For 32 years, the government has viewed unemployment as an issue to be addressed through the national budget.
The “economic outcasts” should no longer ask for a seat at a table that is empty.
They must demand a new social contract, a new political offer, that dismantles the barriers to entry, deregulates the micro-economy, and treats every township street corner as a special economic zone.
The new political offer must recognise that an economy is not a series of fiscal targets, but a social contract that is currently being breached every day that a person is denied the right to work.
The government of national unity has been defined by a fundamental paradox: it has achieved significant macro-stabilisation and institutional “cleaning”, yet it has remained largely stuck in the same neoliberal gear that is failing to stop the bleeding in the labour market.
It can be argued that the GNU has saved the state from collapse, but it hasn’t saved the citizen from exclusion.
The new political offer should shift its trajectory from fixing the state to people.
Lubabalo Cengani holds a masters from Nelson Mandela University in political studies. He is currently the operations officer for Lawula Investments. He writes in his personal capacity
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