File photo: Reuters

Johannesburg - South Africa had almost 500 000 more people in employment during the first quarter than a year earlier as the rand’s recent weakness led manufacturers to boost hiring to capitalise on a rise in demand for local exports.

The financial arena also underpinned the hiring gains, offsetting job losses in the public sector, construction, transport and communications sectors. On a year-on-year basis, employment rose by 3.4 percent given that there were 496 000 more jobs in January to March than in the same period last year, data released by Statistics SA yesterday showed.

However, the underlying tone of the latest Quarterly Labour Force Survey (QLFS) was mixed as the data also revealed the impact of seasonal factors, especially in the first quarter, which is traditionally a time when employers let go workers who were taken on for the Christmas holiday shopping season.

The first quarter is also a time when the agricultural sector lets go of workers employed temporarily in the harvesting season. This year was no different from the previous years as 5 000 jobs were shed in agriculture in the first quarter compared with the fourth quarter, while the trade, hotels and non-financial services sectors shed a combined total of 38 000 jobs. Meanwhile, the mining sector, which has been rocked by a 13-week wage strike in the platinum industry, shed 2 000 jobs during the first quarter.

Partly because of such seasonal factors, the QLFS showed that total employment fell by 122 000 in the first quarter of this year, the largest drop in the past three years. This meant the unemployment rate rose to 25.2 percent from 24.1 percent in the fourth quarter as the labour force expanded by 115 000 in the first quarter, a period when thousands of matriculants enter the market.

“The first quarter of every year tends to be characterised by a seasonal decline in employment on account that workers who were taken on in the fourth quarter of the preceding year in sectors such as retail and tourism, to take account of the additional Christmas shopping and holiday season activity, leave the job market once the season is over,” economists at Econometrix noted in a report to clients.

Nedbank’s group economic unit said the unemployment rate was likely to remain high in the short term, given weak domestic demand, rising input costs, labour disputes, significant infrastructure constraints, and regulatory issues in some key areas.

“The figures provide further evidence that local economic performance is still below potential. However, we anticipate that the Reserve Bank will tighten policy gradually by a cumulative 50 basis points over the next few months as inflation rises above the target range.”

Employment increased strongly year on year in the first three quarters of last year but declined in the last quarter. The number of unemployed people increased by 237 000 during the first quarter.

Kamilla Kaplan, an Investec economist, said high unemployment was consistent with subdued economic growth. Business confidence remained suppressed, which weakened the prospects for a material expansion in the private sector workforce. High unemployment would curb growth in consumer demand, which was a key driver of South Africa’s gross domestic product expansion.

Kaplan said: “Job losses will aggravate the financial pressure many households are experiencing, and will dampen consumer confidence. In an environment of weakening domestic demand, subdued industrial activity and rising unemployment, a gradual pace of monetary policy normalisation is appropriate. We continue to expect one more interest rate hike, of 50 basis points.”

The QLFS showed 110 000 jobs lost in the informal sector during the first quarter. Formal sector employment was up 7 000 quarter on quarter at 10.8 million, while private households shed 14 000 jobs.

The QLFS is a household-based survey and covers labour market activities of people aged 15 to 64.

Employment is a big election issue heading into tomorrow’s polls, with the ruling ANC contending that the National Development Plan is a formula to create jobs, a claim disputed by the opposition DA. - Business Report