South Africa, Africas largest economy, fell into recession half way through 2008, with job losses numbering almost 900,000. Real GDP growth in the third quarter of 2009 suggested that the South African economy was exiting recession. But the South African labour market is unlikely to improve rapidly because of the typical lag between economic and employment recovery. This paper looks at the consequences of the 2008-2009 downturn in terms of changes to labour force status in South Africa and how this varies across the population. It argues that the impact of the financial crisis on the South African labour market is more evident in terms of a rise in the number of discouraged workers (those who have given up on actively seeking work), rather than a surge in official unemployment.