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Stats SA records first fourth-quarter net decline in jobs

Sixty-eight thousand jobs were lost between October and December last year – the first fourth-quarter fall in employment since the start of Statistics SA’s quarterly labour force survey (QLFS) five years ago. Traditionally, temporary jobs are created over the festive season.

The losses were in the formal sector (down 52 000) and private households (down 48 000). This was partly offset by the addition of 8 000 jobs in the informal sector and 24 000 in agriculture.

The formal sector casualties were not in the mining sector, which gained 8 000 jobs, despite industrial unrest in the period. Stats SA noted the industry might not have been adequately captured by the household-based QLFS sample.

Despite the overall job losses, the official unemployment rate fell to 24.9 percent from 25.5 percent in the previous quarter.

Ilke van Zyl, an economic analyst at Absa Capital, said the labour force shrank by a larger 235 000, bringing the overall unemployment rate down. “And the number of unemployed… fell by 166 000 as the numbers of discouraged workers grew [to 2.3 million].”

This is not likely to be the end of job losses. Standard Bank research strategist Shireen Darmalingam said, if Anglo American Platinum went ahead with its plans to lay off 14 000 workers, total mining employment would be reduced by 3 percent.

In addition, “disruptive labour action will take a toll on many sectors in the economy”, according to a note by Standard Bank research strategist Thabi Leoka and Darmalingam. They warned: “Employment in 2013 will be negatively impacted by companies laying off employees as margins come under pressure from raised input costs – especially labour costs.”

Quoting international research on the relationship between wage increases and employment, they said: “A 10 percent increase in wages leads to an estimated 7 percent fall in employment.”

And they warned that this outcome set the scene for a rise in unemployment.

Reserve Bank governor Gill Marcus expressed similar concerns after last month’s monetary policy committee (MPC) meeting. “There are indications that wage increases are trending higher with growth in nominal remuneration per worker increasing from 7.2 percent in the second quarter of last year to 8.1 percent in the third.”

And she quoted Andrew Levy Employment Publications, which found the overall average wage settlement rate in collective bargaining agreements amounted to 7.4 percent in the first nine months of last year. These increases predated the concessions made after violent wildcat strikes mainly in the platinum mining sector.

While the wage hikes were not at the double-digit levels seen in earlier years, they were several notches above the ceiling of the Reserve Bank’s 3 percent to 6 percent target range.

Against this backdrop, the government’s ambitious target – of 500 000 new jobs a year – is becoming increasingly unattainable. Darmalingam and Leoka said the economy would have to grow at 3 percent a year just to maintain current employment levels. Last month the MPC revised its growth estimate for the year to 2.6 percent from 2.9 percent earlier.

The three quarters of recession, starting in the last quarter of 2008, triggered more than two years of job losses. According to original releases from Stats SA, 2.3 million jobs were lost between the fourth quarter of 2008 and the first quarter of 2011.

However, revisions, mainly in the third quarter of 2010 following the mid-year population estimate, reduced the losses to 761 000.

Peter Buwembo, an executive manager at Stats SA, said the QLFS was benchmarked to the population estimate and the increase of 670 800, bringing the total population close to 50 million in mid-2010, affected the numbers of employed and unemployed. The net effect was reflected in the revisions.

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