In this thematic area the Country Review Report identifies the following issues to be addressed; • Unemployment • Service delivery challenges • Public expenditure management capacity • Economic integration in Southern Africa 5.1 Unemployment Unemployment6 remains one of the challenges facing South Africa. The official unemployment rate at the time of reporting was 25,3%, which translates to 4.3 million people. This can be attributed to a number of external and internal factors. The latter include the shortage of critical skills, whilst the former are induced by global economic variables such as the credit crunch that still affects the global financial markets. According to recent statistics released by Statistics South Africa (Stats SA), between the first quarter (January-March) and second quarter(AprilJune) of 2010, the working age population rose from 31,35 million to 31,40 in the second quarter- an increase of 49 000 persons, and equivalent to a rise of 0,2 % over the period. Over the same period, the labour force (i.e. the sum of the employed and the unemployed) decreased by 0,3% to 17,1 million in the second quarter. During the same quarter, the number of employed persons was 0,5% lower than in the first quarter (a decline of 61 000). This was largely on account of a fall in formal sector employment (non agriculture) from 9,0 million in the first quarter to 2,8 million in the second quarter (– down 129 000 (1,4%)). Informal sector gains of 115 thousand (up 5,7%) in the second quarter. Following the quarterly increase of 145 000 persons who were unemployed in the first quarter, the second quarter result indicates that the number increased by 2 000. The number of persons not economically active rose by 109 000 from 14,2 million in the first quarter to 14,3 million in the second quarter – a quarterly increase of 0,8 %. This increase suggests that some persons who had previously been employed in the first quarter may have become ‘not economically active’ during the second quarter of the year. 6 According Stats SA’s official definition: “The unemployed are those people within the economically active population who: (a) did not work during the seven days prior to the interview, (b) want to work and are available to start work within two weeks of the interview, and (c) have taken active steps to look for work or to start some form of self-employment in the four weeks prior to the interview” (italics in the original) (Statistics South Africa Labour Force Survey: September 2005 (Statistics South Africa (2005)) xxiv). The ‘expanded definition’, on the other hand, excludes criterion (c). The expanded definition of ‘the unemployed’ includes the discouraged work-seekers. The ‘discouraged work-seekers’ are those persons who “did not take active steps to find employment in the month prior to the survey interview” (Op cit). The ‘economically active population’ “consists of both those [persons] who are employed and those who are unemployed” (ibid). 31