3rd Quarter Employment Data reflects some stabilisation
- One might be marginally encouraged by news of a 22,000 increase in the number of people employed in the South African economy in the 3rd quarter compared with the 2nd quarter. This suggests some stabilisation in economic activity following the debilitating impact of strikes in the mining and metal industries between January and July.
- Nonetheless, the 81,000 total number of jobs created in the year to the 3rd quarter equal to 0.5% y-o-y growth, falls woefully short of what is needed to accommodate the number of persons entering the job market. The 0.5% growth rate is once again substantially less than the 1.5% or so growth that has been achieved in the overall economy over the past year.
- One of the causes is not difficult to identify in the sense that data are presented which show the vast discrepancy between labour absorption amongst those with tertiary qualifications compared with those with just a Matric or even worse, those without a Matric. Furthermore, the data also show the vast discrepancy in terms of those with tertiary qualifications within the White and Indian communities compared with Coloureds and Black Africans. This links in with other data which show the direct correlation between skills levels amongst Whites and Indians compared with the other two race groups. In turn, this goes a long way towards explaining the rationale for the high levels of inequality in employment which exist between the different races.
- On a q-o-q basis, there was an improvement of 71,000 in the formal sector, but a decrease of -39,000 in the informal sector. A surprisingly strong performance emanated from employment in the construction sector, which one assumes is linked to the building of new power stations. In contrast, the ongoing haemorrhage of jobs in the manufacturing sector is witnessed both from a q-o-q and y-o-y perspective. There was also a substantial loss of jobs amongst domestic workers (private households), which may indicate that moves to establish relatively higher minimum wage requirements might be having an adverse impact on employment in this segment. This is over and above the hard times befalling many households financially.
- From a monetary policy perspective, there is nothing dramatic about the latest employment data other than to suggest that the key to improving growth and employment in the country lies in the addressing structural impediments, including, most importantly, education and skills development.
Source : Econometrix October 2014