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Cape Town has established a reputation as a premier business destination. Despite the effects of the national lockdowns during 2020, the city continues to attract investment.

Despite the unique challenges of 2020, the Economic Performance Indicators for Cape Town (EPIC) Report for Q4 of the year showed some positive economic statistics for Cape Town, namely:

  • The city attracted R11,27 billion in investments. 
  • More than 7 500 new jobs were created in Cape Town. 

Let’s explore Cape Town’s labour market, employment rates and potential for future job creation in more detail.

Cape Town has the Country’s Highest Employment Rate

Cape Town currently has a working-age population of 3,02 million people and a labour force of 1,97 million.

On a quarter-on-quarter basis, employment in Cape Town has improved, increasing by 35 035 jobs. Cape Town’s broad unemployment rate of 29% remains lower than that of any other South African metros.  

When comparing quarter 3 to quarter 4, we can see a drop in both the strict and broad unemployment rates in Cape Town.

Official (strict) unemployment rate in Cape Town:

  • Q3 2020: 23,1% 
  • Q4 2020: 22,6%

Broad (expanded) unemployment rate in Cape Town:

  • Q3 2020: 29,1% 
  • Q4 2020: 24,8%

As a province, the greater Western Cape area is also leading the way in terms of employment. According to the South African Government’s Quarterly Labour Force Report for Q4 of 2020, the largest employment increase from Q3 to Q4 was recorded in the Western Cape, growing by 121 000 jobs. KwaZulu-Natal was in second place with an increase of 66 000, and Gauteng third with 64 000. 

Over 500 000 Seeking Employment in Cape Town

While these employment trends are good news for Cape Town, many residents are still facing the challenge of unemployment. The City of Cape Town’s Department of Enterprise and Investment in partnership with stakeholders and Special Business Partners, have launched a number of initiatives to assist in creating the conditions for employment,  such as the Cape Skills and Accelerator as well as Jobs Connect.

As lockdown restrictions began to ease in Q3 of 2020, many unemployed South Africans were able to start actively searching for work again. During Q4, the number of unemployed job-seekers in Cape Town increased by:

  • 86 478 quarter-on-quarter;
  • 43 061 year-on-year.

This means that the Cape Town metro was home to a total of 511 863 unemployed job-seekers by the end of Q4 2020.

Cape Town Construction Sector Leads Employment Growth

Which sectors are currently employing the most Cape Town workers? 

During the fourth quarter of 2020, eight sectors in Cape Town contributed positively to quarter-on-quarter employment growth, while two contributed negatively. The construction sector was the largest contributor to employment growth during this time. 

The top performers with upward employment trends included:

  • Construction: 36 235 jobs
  • Private households: 9 472 jobs
  • Community, social and other personal services: 8 677 jobs
  • Agriculture, forestry and fishing: 5 972 jobs 
  • Manufacturing; 5 772 jobs 
  • Finance, real estate and business services: 5 407 jobs 

Meanwhile, quarter-on-quarter employment rates fell in the transport and communication sector (-2 866 jobs) and in the trade, hotels and restaurants sector (-2 393 jobs).

Tourism and Job Creation in Cape Town

Cape Town is a much-loved local and international tourist destination, famed for being one of the most scenic cities in the world. The Cape tourism sector plays a crucial role in the local economy, and also contributes significantly to the economy on a national level. 

Businesses specialising in tourism and hospitality were undoubtedly the hardest hit during the South African lockdown that was implemented toward the end of March (Q1) in 2020. We can see this reflected in the significant employment decline in transport, hotels and restaurants recorded in the EPIC Report. However, despite this there have been pockets of success stories in these sectors that have showcased the resilience and ingenuity of Cape Town-based businesses. 

Some intra-provincial travel resumed in June and domestic tourism activity picked up as restrictions eased further in August. November 2020 saw the resumption of international travel to and from South Africa. Despite this, Cape Town’s tourism sector still has a long road to travel towards post-lockdown recovery. 

Tourism Trends Favour Local Travel

According to a festive season 2020/2021 survey, only 40% of respondents had planned any leisure travel activities during the holiday season. Those choosing not to travel said their biggest concerns were COVID-19 safety, financial constraints, and uncertainty around changes to travel regulations.  

Of those travelling, only 1% were taking international trips, while the rest planned to stay on the African continent. This trend towards local travel is promising news for the tourism sector in South Africa and Africa as a whole.

How are Cape Town’s most famous tourist attractions faring, since reopening to the public in Q3? 

The good news is that the city’s five biggest attractions recorded quarter-on-quarter increases in the last months of 2020, thanks to festive season holidaymakers. These landmarks recorded the following numbers in Q4:

  • Kirstenbosch National Botanical Gardens: 167 497 visitors
  • The Table Mountain Aerial Cableway: 78 517 visitors
  • The Cape of Good Hope: 65 954 visitors 
  • Boulders Beach: 34 429 visitors
  • Robben Island: 10 312 visitors 

It’s worth noting that Robben Island saw the worst year-on-year performance, which may be due to the lower international tourist activity.

While tourism in Cape Town is showing signs of recovery, activity remains subdued. Industry insiders say that the return of international visitors will make continued recovery possible.

 

Tourists visiting Table Mountain

Table Mountain before the pandemic hit

The Tourism Sector and Youth Unemployment in Cape Town

The youth unemployment rate in Cape Town (which applies to individuals aged 15 to 24) has worsened on both a quarterly and yearly basis. 

Youth unemployment in Cape Town grew to 52.2% between Q3 and Q4. It also increased notably between 2019 and 2020. While it is still lower than South Africa’s national youth unemployment rate, the challenge to increase youth employment remains, and residents seeking work opportunities are encouraged to visit  jobsconnect.leelyn.co.za for entry-level and skilled vacancies. 

A recent South African case study explored skills requirements, skills gaps and potential job creation for young people. This in-depth study shows the value of the tourism industry and its related sectors in terms of the employment ecosystem

Tourism is an “industry without smokestacks” (IWOSS), meaning the sector has the potential to employ a large number of people with low to moderate labour skills. It is one of the sectors with the best potential for economic growth and job creation in South Africa.

Other IWOSS sectors that show similar potential are logistics, horticulture and agri-processing.

Conclusion

Overall, Cape Town’s strategy for growth and recovery is gaining momentum. The City’s Planning Department approved construction plans to the value of R16 billion in 2020. The 10-point tourism strategy also launched in December 2020, with the aim of driving economic recovery.

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