Is South Africa’s labour market finally stabilising? Unemployment trends analysed

While the labour market remains weak, at least it is no longer deteriorating. South Africa’s official unemployment rate declined in the fourth quarter of 2025, extending its recent easing trend – pointing to stabilisation rather than deterioration of the labour market. The survey, released on Tuesday, recorded the official unemployment rate at 31.4%, down from 31.9% in the third quarter.

At face value,the data suggests steady progress.However, the broader labour market dynamics tell a more nuanced story. While employment increased by 44,000 people to reach 17.1 million people in jobs, the labour force itself shrank by 128,000 citizens. At the same time, the number of South Africans classified as outside the labour force rose by 248,000.

This combination indicates that part of the decline in unemployment was driven by fewer people actively participating in the labour market. The labour forceparticipation rate slipped to 59.3% during the quarter, highlighting the continued presence of discouraged work-seekers. Nolan Wapenaar, co-chief investment officer at Anchor Capital, said the decline in unemployment should be viewed as incremental rather than transformative.

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The modest decline in unemployment is “incremental rather than transformative,” said Wapenaar. “Still, it confirms that employment momentum has stabilised after a weak start to 2025, and broad-based participation suggests the recovery is not confined to a single industry, improving the quality of the improvement.” Sectoral datapoints to both progress and pressure within the economy. Seven of the ten industries tracked recorded employment gains, with community and social services, construction and finance leading the increases. Agriculture also posted gains.

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