Executive Summary
eThekwini’s labour market showed meaningful improvement in the fourth quarter of 2025. The official unemployment rate declined from 27.8 per cent to 24.1 per cent, a 3.7 percentage point improvement, translating into approximately 62,000 additional people employed compared to the third quarter.
This represents a notable recovery following a sharp mid-year deterioration, during which unemployment rose to its highest level since the post-pandemic recovery period. However, underlying structural pressures remain significant. The expanded unemployment rate stands at 39.2 per cent, indicating that nearly two in five working-age adults who are willing to work remain without employment.
Relative to KwaZulu-Natal, where unemployment is 32.3 per cent, eThekwini continues to perform comparatively better. Nevertheless, the scale of the challenge remains substantial. The metro still has more than 400,000 individuals actively seeking work and over one million adults outside the labour force. The policy implication for Council is clear: while the fourth quarter rebound is encouraging, it remains fragile. Sustained and consistent employment growth over multiple quarters will be required to restore labour market conditions to pre-2025 levels and to meaningfully reduce structural unemployment.
1. Overview of the current labour market situation
eThekwini is South Africa’s third-largest metropolitan economy, home to approximately four million residents and serving as the economic anchor of KwaZulu-Natal. The municipality’s revenue base, service delivery capacity, and social stability are closely linked to labour market performance. Employment growth strengthens household income, supports municipal revenue through rates and service charges, and reduces pressure on social assistance and indigent support systems. Conversely, rising unemployment increases fiscal and social strain.
The Quarterly Labour Force Survey (QLFS) published by Statistics South Africa provides the most authoritative measure of employment dynamics, capturing those employed, unemployed, and economically inactive. The fourth quarter 2025 release (covering October to December 2025) offers the most recent assessment of eThekwini’s labour market conditions. The fourth quarter results present a mixed picture. On a quarterly basis, employment rebounded. However, year-on-year comparisons reveal notable deterioration.
According to the QLFS, Total employment stood at 1.268 million in the fourth quarter of 2025, an increase of 62,000 compared to the third quarter. However, this remains approximately 65,000 lower than the fourth quarter 2024 level. The official unemployment rate declined to 24.1 per cent from 27.8 per cent in the third quarter. Nevertheless, unemployment remains seven percentage points higher than the fourth quarter 2024 rate of 17.1 per cent. In absolute terms, the metro recorded a net increase of approximately 62,000 employed persons between the third and fourth quarters, with employment rising from 1.206 million to 1.268 million. Over the same period, the number of unemployed individuals declined by approximately 60,000 to 403,000. This simultaneous increase in employment and decline in unemployment indicates genuine labour absorption rather than statistical movement driven by labour force exits.
2. Labour Market Adjustment in a Changing Economic Environment
eThekwini is home to approximately 3.9 million residents, of whom 2.73 million are of working age (15–64 years). As the economic centre of KwaZulu-Natal, the metro hosts Africa’s busiest port and a diversified economy spanning manufacturing, finance, trade, and tourism.
However, since 2020, the local economy has been exposed to successive shocks, including the COVID-19 lockdowns, the July 2021 unrest, the April 2022 KwaZulu-Natal floods, and prolonged electricity supply constraints during 2022 and 2023. These disruptions have had lasting implications for employment stability and business confidence. This analysis examines the fourth quarter 2025 Quarterly Labour Force Survey results within the broader context of long-term labour market adjustment over the past decade.
3. A Volatile Year with Partial Recovery
The fourth quarter 2025 improvement must be interpreted within the context of a volatile year for eThekwini’s labour market. The year began relatively stable, with the first quarter of 2025 unemployment at 21.4 per cent and approximately 1.3 million people employed. Conditions deteriorated during the second and third quarters. Between the first and third quarters, the metro shed an estimated 95,000 jobs, while unemployment increased by 6.4 percentage points. The fourth quarter rebound recovered roughly two-thirds of these losses. However, year-on-year comparisons remain concerning. Unemployment in the fourth quarter 2025 stood at 24.1 per cent, compared to 17.1 per cent in the fourth quarter 2024. This indicates that labour market conditions remain weaker than a year earlier.
4. The Expanded Unemployment Challenge
The official unemployment rate does not fully capture the depth of labour market pressure. The expanded unemployment rate of 39.2 per cent indicates that a substantial share of working-age adults is either discouraged or marginally attached to the labour force.More than one million working-age residents remain outside the labour force. This implies that fewer than half of working-age residents are employed. Such structural constraints limit income growth, household demand, and long-term economic resilience.
5. eThekwini Formal and Informal Employment
The sectoral employment profile indicates that formal non-agricultural employment remains the dominant source of jobs in eThekwini, averaging between 0.80 million and 0.97 million over the period under review. Following a contraction during 2021 and 2022, formal employment recovered steadily through 2023 and 2024, stabilising near pre-2020 levels by mid-2025 before moderating slightly in the most recent quarter to approximately 0.88 million.
Informal sector employment shows gradual expansion, rising from approximately 0.17 million in 2020 to 0.29 million by December 2025. This upward trend suggests continued labour absorption outside the formal economy, reflecting adaptive responses through small-scale and self-employment activity. Private household employment remained relatively stable, fluctuating between 0.16 million and 0.21 million. Agricultural employment represented a small and largely stable share of total employment throughout the period. Overall, employment growth since 2022 has been supported by both formal sector recovery and steady expansion in informal activity. However, the increasing contribution of informal employment underscores the importance of sustained formal sector investment and productivity growth to strengthen long-term labour market outcomes.
6. Conclusion
The fourth quarter rebound is encouraging but should not lead to complacency. Between the first and third quarters of 2025, the metro lost the equivalent of several years of employment gains and has only partially recovered. Strategic focus areas for Council include protecting the formal employment base. Formal employment generates municipal revenue, provides income stability, and supports household consumption. Targeted support for labour-intensive sectors such as manufacturing, construction, and community services may help stabilise employment. Addressing discouraged work-seekers. With more than one million adults outside the labour force, employment programmes and skills development initiatives must extend beyond the officially unemployed population. The expanded unemployment rate provides a more comprehensive measure of labour market stress.
The fourth quarter improvement may partly reflect seasonal employment patterns in retail, hospitality, and tourism that could reverse in the first quarter of 2026. Interest rate adjustments have yet to translate into sustained recovery in construction and property markets. Although load-shedding has moderated, electricity supply constraints continue to affect manufacturing output and investor confidence. The absorption rate of 46.4 per cent remains above pandemic-era lows, reflecting underlying economic resilience. eThekwini’s port and logistics corridor, combined with its diversified manufacturing base, positions the metro favourably should national export conditions strengthen. Youth-targeted employment programmes aligned with growing sectors such as community services, construction, and finance could accelerate labour market recovery.
