Wiseman Khuzwayo
Employment creation in South Africa stalled in July, growing at an annualised rate of just 0.23 percent following sharp declines of 3.1 percent in May and 2 percent in June, according to Adcorp’s latest employment index.
Loane Sharp, a labour economist at Adcorp, said yesterday that a net 3 773 jobs were added in July, which was statistically insignificant.
Adcorp, the listed human capital management group, found that most sectors showed employment gains, including mining (8.1 percent), transport and communication (4.3 percent) and wholesale and retail trade (3.5 percent).
However, declines in construction (minus 11.7 percent), manufacturing (minus 3.6 percent) and financial services (minus 4.4 percent) offset almost all the growth elsewhere.
According to figures released by Statistics SA earlier this month, the unemployment rate fell marginally to 24.9 percent in the second quarter from 25.2 percent in the first quarter.
The official Quarterly Labour Force Survey showed that the increase in total employment was mainly driven by the increase in employment in community and social services (121 000), construction (26 000) and mining (21 000). Jobs were lost in wholesale and retail trade (91 000), manufacturing (44 000) and agriculture (18 000).
Adcorp said labour productivity was now at its lowest in 46 years. “Productivity – making the most of limited resources – is a paramount economic goal,” Adcorp said.
“Similarly labour productivity – the contribution labour makes to productivity – is the central force of the labour market. For example, higher labour productivity combined with competition between employers causes real wages to rise, and the history of rising living standards is closely connected to improved methods of recruiting, training, equipping and managing workers.”
The employment index said despite the overarching importance of labour productivity, there was no commonly agreed method of measuring it. The most common definition – output per worker (or, more correctly, output per worker-hour) – suffered from serious limitations. Real output per worker had been rising consistently in South Africa since the 1960s, when official figures began.
However, Adcorp asked: “For one thing, if labour productivity is sharply rising, why is the economy’s labour intensity falling, and why is employees’ share of national income at an all-time low?”.
It said that the problem with the output-per-worker definition of labour productivity was that output was not only produced by workers. The contributions of other factors of production – land, capital and entrepreneurship – were omitted by dividing output by the number of workers alone.
Adcorp said: “A better procedure is to standardise the output per worker measure by the amount of capital used in the production process.”