Jobs grow slower than labour force

File photo: David McNew/Getty Images/AFP

File photo: David McNew/Getty Images/AFP

Published Jul 30, 2014

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The unemployment rate rose to 25.5 percent in the second quarter from 25.2 percent in the prior one, indicating reticence by employers to increase their workforce, fuelled by the five-month strike in the platinum sector, data released by Statistics SA yesterday showed.

Th Quarterly Labour Force Survey (QLFS) also reflected the weak underlying performance of the economy.

South Africa is placed third in Bloomberg’s global Misery Index, with 32.1 points, after Venezuela on 68 points and Bosnia at 49 points.

At number four is Greece with 26.2 points, followed by Egypt on 21.6 points.

The index is a measure of economic wellbeing in a given economy, computed by taking the sum of a country’s unemployment rate and inflation rate over a certain period.

An increasing index means a worsening economic climate for the economy in question, and vice-versa for a falling score.

The QLFS is a household-based sample survey which collects data on the labour market activities of individuals aged 15 to 64 years.

The increase in the unemployment rate was due to a large increase in the size of the labour force relative to a modest increase in the number of employed people.

The survey shows employment increased by 39 000 in the second quarter, while unemployment increased by 87 000, showing that the labour force increased by 126 000 people.

The expanded unemployment rate reached 35.6 percent in the second quarter from 35.1 percent in the previous quarter. The number of discouraged job seekers increased by 2.7 percent.

Kamilla Kaplan, an economist at Investec, said an assessment of employment developments across the main sectors of the economy highlighted, in particular, the weakness of the industrial sector.

Specifically, compared with the first quarter, employment levels fell in the mining, manufacturing and utilities sectors.

She said: “Presently, prospects for meaningful job creation in the productive sector of the economy are restricted by the broader underperfomance of the domestic economy, as well as the rapid rise in labour costs.

“A reduction in producer profitability would likely increase the need for production to be rendered more efficient. This in turn could imply mechanisation.”

Employment increased in private households and the informal sector. It fell in agriculture and the formal sector.

Nedbank economists Johannes Khosa and Dennis Dykes said in a commentary that the unemployment rate was likely to remain high in the short term given weak domestic demand, rising input costs, frequent labour disputes, significant infrastructure constraints and regulatory issues in some of the key sectors.

In a note to clients, economics consultancy Econometrix said not surprisingly, in light of of the platinum strike and its knock-on effects on manufacturing and construction, these were the main sectors posting job losses in the quarter.

It said: “Unemployment rose particularly in the white population, to its highest level ever, suggesting that implementation of retrenchments focused on this segment of the population gathered momentum.”

Econometrix said that unfortunately, the aggressive wage increases being awarded on the back of strike activity were likely to increase unemployment further. - Business Report

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