Informal employment in South Africa is said to be booming, with a 7.7 percent annual increase registered in September, while formal employment is under pressure, according to the latest Employment Index released by Adcorp yesterday.

The report said official employment grew by a slight 2.5 percent last month, underpinned by a 4 percent rise in placements by temporary employment agencies.

The staffing group said employment dropped sharply in the manufacturing (16.7 percent), transport and logistics (9 percent) and construction (4.6 percent) sectors, representing a loss of 25 000 jobs during the month. These losses were offset by employment gains in the government (10.5 percent), finance (8.2 percent) and wholesale and retail trade (6.6 percent) sectors.

Adcorp said the informal sector, “which evades income taxes and circumvents labour laws, now represents 32.8 percent of South Africa’s potential workforce. During September, the informal sector grew at an annual 7.7 percent rate, making it the fastest-growing segment of economic activity as it relates to individuals.”

The report said more than 6.2 million people eked out a living in this sector, unprotected by labour laws and beneath the radar screens of the tax authorities, making it the second largest sector of the labour market. Officially recorded employment accounts for 12.7 million people.

“In other words, the informal sector is now almost half the size of officially recorded employment. It is just 30.2 percent smaller than standard employment (permanent work) and 63.5 percent bigger than non-standard employment (temporary and agency work).

“There are thought to be 2.1 million employers, each employing on average 2.9 workers, in the informal sector.”

According to Adcorp, the informal sector possesses several important characteristics:

n Contracts of employment, both written and verbal, are strictly speaking absent;

n Employers do not make contributions to medical aids or pension funds;

n Employers do not make statutory deductions, including payroll taxes such as unemployment insurance or skills development levies;

n Employers do not report or pay income tax to the SA Revenue Service; and

n Employees do not have recourse to formal labour dispute resolution mechanisms such as the Commission for Conciliation, Mediation and Arbitration and labour courts.

The report said the data suggested that the formal labour market was gradually disintegrating, which could be attributed to several causes.

The most prominent was the influx of an estimated 1.5 million to 3.5 million illegal immigrants from neighbouring countries, notably Zimbabwe, Malawi and Mozambique, since the last population census conducted in 2001.

Another cause, more difficult to quantify, was the effect of labour laws and regulations. - Wiseman Khuzwayo