JOHANNESBURG, Gauteng — South Africa’s formal sector jobs market faced renewed pressure in the second quarter of 2026, shedding 14,000 positions as the broader economy contracted. The decline underscores a persistent struggle to generate sustainable employment amid sluggish economic growth, weak business confidence, and severe infrastructure bottlenecks.
According to the latest employment figures, total formal employment in the country now stands at approximately 10.4 million. The most significant job losses were concentrated in the manufacturing, business services, and trade sectors.
A Shift Toward Part-Time Work
While the formal sector lost 14,000 jobs between March and June, the underlying data reveals a concerning shift in the types of roles being created. Full-time employment fell by 40,000 over the quarter, bringing the year-on-year decline in permanent positions to 96,000. Conversely, part-time employment increased by 26,000 during the same period.
Kevin Lings, chief economist at STANLIB, noted that this trend is a clear indicator of waning business confidence.
“Generally, when you’ve seen companies favor part-time work versus full-time work, it suggests a lack of confidence,” Lings explained. “Part-time work tends to suggest that companies themselves are not particularly confident about the business environment and so they don’t want to take on the commitment of full-time employment.”
Lings emphasized that while part-time work is preferable to unemployment, it limits workers’ ability to secure long-term financial milestones, such as purchasing a home or a vehicle, thereby stifling broader economic momentum. This hesitation is further reflected in capital formation, which dropped by 2% on a quarter-on-quarter basis.
**The Infrastructure and Investment Deficit**
The South African economy stalled in the second quarter (April to June 2026), contracting by 0.2%. Lings pointed out that the job market has been stagnant for three to four years, largely because the country’s economic growth rate has barely managed to hit 1% annually over the last three years.
According to Lings, the single biggest factor holding back job creation is a severe lack of investment.
“Investment in South Africa typically sits at around 13% to 14% of GDP. If you look at most emerging markets, their numbers are up at 30% of GDP,” Lings stated. He noted that current investment levels are insufficient to even maintain existing machinery, equipment, and infrastructure.
To reverse the trend, Lings argued for an urgent and aggressive focus on infrastructure development through public-private partnerships. He highlighted that the private sector is currently holding back on expansion due to critical limitations in water supply, port capacity, and rail networks.
Sector-Specific Headwinds
The 0.2% economic contraction was primarily driven by the mining, trade, and manufacturing sectors, each facing unique complexities:
- Mining: Despite favorable commodity prices and stable profitability, the mining sector is missing out on major expansion opportunities. Lings noted that mining employment remained fairly stable in Q2, but the sector cannot increase export volumes without significant improvements in rail and port capacity.
- Manufacturing: The sector is flagged as one of the most critically weak in the country, alongside construction. Manufacturers are becoming increasingly uncompetitive due to a surge in cheap imports and high production costs, particularly driven by double-digit electricity price increases.
- Services and Retail: In contrast to the productive and construction sectors, the services element of the economy, including retail trade and business services, has shown greater resilience.
Wage Growth Outpaced by Inflation
The loss of formal jobs has also impacted overall earnings, with total employee pay dipping by 4.8 billion rand over the quarter.
While salaries and wages saw a nominal increase of 3.1% (rising to just over 4% when including overtime pay), this growth is failing to keep pace with inflation. Inflation currently sits at 4.4% and is projected to exceed 5% in the coming months.
Lings warned that this erosion of real household income could force consumers to either pull back on expenditure or rely heavily on credit to maintain spending levels.
Despite these pressures on household incomes, tax revenue has held up reasonably well so far. Individual income tax collections remain stable, and company tax revenues are currently ahead of budget. However, Lings cautioned that if consumer spending contracts due to stagnant real wages, it could inevitably place pressure on the South African Revenue Service (SARS) and narrow the country’s already constrained tax base later in the year.
