Will unemployment worsen in 2026?

The unemployment rate in 2025 continued to fluctuate, rising in one quarter and falling in another. However, the number of unemployed people in the country is still higher than in other countries.

Part of the reason unemployment had not improved was that companies that retrenched employees and some that completely closed down.

Changes in consumer behaviour and preferences also led to financial distress.

There was a slight difference in the unemployment rate between this year and the previous one. According to Statistics SA’s Quarterly Labour Force Survey, unemployment in the third quarter of 2025 dropped to 31.9%. Unemployment rate stood at 32.1% in the third quarter of 2024.

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Unemployment in 2025

In terms of the numbers, employed people increased by 248 000 to about 17.1 million, while the number of unemployed people decreased by 360 000 to 8 million. Discouraged work-seekers increased by 36 000 and other available potential job seekers increased by 130 000 to 965 000.

In contrast, the number of unavailable job seekers increased by 64 000 to 83 000, resulting in a net increase of 230 000 to 4.5 million in the potential labour force population.

Why it could worsen in 2026

The US tariffs are one of the reasons why it is expected that unemployment will worsen in 2026, as experts believe the third-quarter 2025 unemployment drop is a brief pause before the full impact of the tariffs hits the workforce.

Jee-A van der Linde, senior economist at Oxford Economics Africa, says the decline in the unemployment rate is driven by job increases in construction and trade. However, manufacturing continues to shed jobs.

“However, given our view of a delayed impact from US tariffs, the labour market will remain under pressure and may weaken over the coming quarters,” he said.

“Looking at employment by industry, manufacturing is the sector most exposed to US import tariffs, which decreased on a quarterly basis.

“Meanwhile, recent economic data releases align with our view that the business environment has not yet improved enough for economic growth to pick up meaningfully in the near term.”

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First company to retrench

One of the most significant retrenchments was recorded in the manufacturing sector when Goodyear tyres announced in June 2025 that it would close its manufacturing plant in Nelson Mandela Bay, Eastern Cape. The closure impacted more than 900 jobs.

Goodyear tyres started manufacturing in Kariega, formerly known as Uitenhage, in 1947. The plant’s closure was cited as part of a restructuring process.

“Goodyear South Africa is launching a restructuring process in accordance with the provisions of the Labour Relations Act to address proposals regarding the closure of its manufacturing facility in South Africa.”

The National Union of Metalworkers of South Africa (Numsa) fought for workers to receive more than the amount initially offered by the company.

Numsa’s 488 affiliated employees with between one and 26 years at the plant received between roughly R200 000 and R650 000 each. 64 members with between 26 and more than 40 years of service received more than R1 million each.

Ford retrenches 470 employees

In August, Ford announced it would retrench 470 people at its Pretoria and Eastern Cape plants, due to evolving market demands.

This came after the US announced 24% tariffs on vehicle imports, putting pressure on the automotive industry to mitigate the impact. But Ford said the tariffs were not among the reasons for the retrenchments.

Those affected by the retrenchments were 391 workers at the Silverton assembly plant in Pretoria, 73 workers at the Struandale engine plant in Gqeberha and a further 10 administrative staff.  

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Coca-Cola shuts down in two provinces

The beverage giant Coca-Cola announced plans to close down its plants in Bloemfontein, Free State and East London, Eastern Cape, in September, resulting in the retrenchment of at least 680 employees.

This made Coca-Cola the third major company to retrench employees in the Eastern Cape since June this year, prompting the Select Committee on Economic Development and Trade to ask the government to step in. The beverage giant also cited the company’s restructuring as the reason for the closure.

“Unless urgent and coordinated action is taken, the damage to our economy, communities, and industrial base will be irreversible. The stakes are high, and these job losses will push families into greater poverty, further eroding trust in our economic stability.”

Warning to Eastern Cape

CEO of the National Association of Automobile Manufacturers of South Africa (Naamsa) warned that the Eastern Cape will soon be filled with ghost towns due to job cuts and company closures.

He said Mercedes-Benz will feel the pinch of the high tariffs.

Mercedes-Benz manufactures its C-Class model in East London and exports some of these to the US.

Mabasa said the brand plays a significant role in the Eastern Cape’s economy, not forgetting its contribution to employment in the province.

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