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Adcorp: Labour productivity hits low

While no significant changes in all kinds of jobs - formal, informal, permanent and temporary - were seen during October, SA's labour productivity fell to its lowest level in 40 years.

This is according to Adcorp's monthly Employment Index for October 2011, released in Johannesburg on Thursday.

File photo: Simphiwe Mbokazi.

The index showed that throughout 2011 labour productivity growth had been negative, with an all-time low reached last month.

Meanwhile, this month's Index also showed that employment had dropped slightly in the mining (-7.8%), construction (-7.0%), and manufacturing (-4.5%) sectors on an annualised basis.

Adcorp labour market analyst Loane Sharp said these losses were offset by job increases in wholesale and retail trade (+4.4%) and financial services (+3.0%).

Reflecting good underlying conditions in the consumer sectors, employment of clerks (+3.3%) and service workers (+2.7%) grew steadily, as did domestic work (+5.8%).

“Interestingly,” Sharp said, “for the first time this year, during October government job creation was essentially static.”

The statistics presented in the human capital management group's index this month showed that SA had exhibited negative labour “value-added” and the lowest level of labour productivity since the early 1970s.

“This negative trend in labour productivity suggests that adding more workers does not necessarily translate into material increases in business output,” Sharp added.

According to Adcorp, one of the problems with the assessment of labour productivity in SA was that it was measured according to “output per worker” thus attributing all output to workers.

Sharp noted that a far more accurate picture of labour's productivity would emerge if factors like capital equipment, technology, land, and other production factors were considered.

In 2011, South African labour productivity growth had been negative (-1.0%). This might well explain why, when real GDP rose by 6.6% after the 2008/9 global financial crisis, employment rose a meagre 2.6%.

While GDP figures for the third quarter of 2011 were not yet available, Sharp expected them to confirm the worrying declining labour productivity growth trend in the country.

Sharp insisted that labour productivity remained a critical indicator of employment.

When adding workers yields greater output (i.e. when labour's value-added is positive), employers had an incentive to employ more workers, he said.

Adcorp did not expect a sustained employment rise until at least the second half of next year. - I-Net Bridge

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