Economist warns rising fuel prices threaten South African job market amid Q2 2026 employment decline

Motsa made the remarks while commenting on the latest employment data from Statistics South Africa (Stats SA). The latest data show that the South African economy lost 16,459 jobs between Q1 and Q2 2026.

Total formal non-agricultural employment declined from 10.44 million employees in Q1 2026 to 10.42 million in Q2 2026. The employment picture was mixed across sectors, with manufacturing, finance, trade and transport shedding jobs.

Four sectors recorded employment gains: community (+29,578 to 2.85 million), mining (+1,002 to 472,804), construction (+1,412 to 563,555), and utilities (+128 to 65,611).

This means mining employment rose to approximately 472,804 workers in Q2 2026, up slightly from 471,802 in Q1 2026.

That gain stands out because mining remained notably stable, even though the sector’s GDP contracted by 3% in Q2 2026 (q-o-q).

Fuelling labour costs

The outlook for labour costs, inflation and employment remains vulnerable to developments in energy markets, particularly fuel prices.

According to Motsa, diesel prices would be approximately 42% to 43% higher than March 2022 levels, while petrol prices would be about 32% higher.

The national retail price of paraffin would be almost 48% above its pre-war benchmark.

The economist warns that these elevated fuel prices pose a significant cost risk because diesel is a critical input across the mining, transport, manufacturing and agricultural sectors.

Higher transport and logistics costs tend to filter through supply chains, ultimately placing upward pressure on consumer prices.

For employers, persistently high fuel costs can erode operating margins, reduce the scope for future wage increases and limit hiring.

If global oil prices remain elevated or the rand weakens, renewed fuel price pressure could reinforce inflationary risks and strain businesses already grappling with weak productivity growth.

In this environment, wage negotiations may become increasingly challenging as workers seek compensation for higher living costs and firms face rising operating expenses and subdued productivity performance.

Positive income

Mining remains one of the most important providers of relatively high-paying jobs, with average earnings per worker significantly above the national average.

South Africa’s wage data for May 2026 indicates that nominal earnings growth remained positive across most sectors, although gains were uneven and generally moderate.

Average monthly per capita earnings for the total economy rose 4.1% year on year, from R29,402 in May 2025 to R30,611 in May 2026.

With average consumer inflation at 3.2% in 2025, aggregate earnings growth remained marginally ahead, implying a modest improvement in workers’ purchasing power.

The mining sector reported average monthly earnings per capita of R37,009, up 3.4% from May 2025.

This growth exceeded inflation only marginally in 2025, reinforcing mining’s position as one of the better-paying sectors and keeping earnings well above the economy-wide average.

The modest pace of growth likely reflects ongoing cost pressures, multi-year wage settlements that have brought relative stability in major parts of the sector, and employers’ efforts to manage operating expenses amid challenging conditions.

Productivity on the decline

The productivity index declined to 88 in May 2026 (Q1 2019 = 100), indicating that labour productivity remains approximately 12% below pre-pandemic levels.

Productivity has generally trended downward since 2021 and remains well below its 2019 benchmark, reflecting persistent structural constraints such as infrastructure bottlenecks, energy disruptions, logistics inefficiencies and weak economic growth.

By contrast, real gross earnings per worker have risen markedly.

The real earnings index reached 158 in May 2026, suggesting that inflation-adjusted earnings per worker are approximately 58% above pre-pandemic levels.

Some of this increase reflects changes in employment composition and improved remuneration among retained workers, but it also points to a widening disconnect between labour compensation and output growth.

This divergence between real earnings and productivity highlights one of South Africa’s central economic and employment challenges.

Sustainable wage growth ultimately depends on stronger productivity growth.

Without improvements in infrastructure, logistics efficiency, investment and skills development, continued earnings increases may become increasingly difficult for firms to absorb without reducing employment growth or investment.