Construction laying off 9 000 workers. Photo: Thobile Mathonsi/African News Agency(ANA)
Construction laying off 9 000 workers. Photo: Thobile Mathonsi/African News Agency(ANA)

Manufacturing the biggest contributor to SA jobs bloodbath

By Siphelele Dludla Time of article published Sep 27, 2019

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JOHANNESBURG – The Manufacturing sector was the biggest contributor to the job bloodbath in the second quarter to June, as South Africa's economy grapples with meaningful growth, largely due to stagnant growth and increasing external factors in trade tensions among major global economies.

More than 15 000 jobs were lost in the sector, which was a close-run thing with business services shedding 14 000 jobs, trade axing 10 000 workers and construction laying off 9 000 workers.

Only the transport industry remained unchanged.

Full-time employment decreased by 26000 to 9103000, and part-time employment increased by 24000 to 1069000.

NKC Research’s economist Jee-A van der Linde said the second-quarter non-farm employment dip was perhaps a more accurate reflection of South Africa's current economic circumstances compared to the year-on-year increase.

“South Africa faces a significant challenge in the short to medium term to address high unemployment and growing inequality and to halt a trend of declining real gross domestic product (GDP) per capita levels,” Van der Linde said.

“The near-term outlook for the South African economy remains decisively gloomy. The economy urgently needs a conducive environment for the private sector to flourish, of which a prerequisite will have to be policy and energy supply certainty.”

Data from Statistics SA’s Quarterly Employment Statistics showed that employment in the domestic economy showed a net quarterly decrease of 2000 employees quarter-on-quarter, from 10174000 in March 2019 to 10172000 in June.

StatsSA said full-time employment declined by 26000 quarter-on-quarter, from 9129000 in March to 9103000 in June this year, while part-time employment increased by 24000 quarter-on-quarter, from 1045000 to 1069000 over the same period.

Steel and Engineering Industries Federation of Southern Africa economist Marique Kruger said businesses in the manufacturing sector were struggling and continued to face headwinds amid increasing input costs. Kruger said businesses were left with very little leeway but to pass cost increases on to the market, and were consequently forced to take drastic measures to survive.

“The decrease in formal employment numbers in the South African economy is discouraging, especially given the decreasing contributions of labour-intensive sectors such as manufacturing, construction and agriculture to GDP,” Kruger said. “The current challenging operating environment, therefore, highlights the importance of stakeholders continuing to engage to seek sustainable solutions to the persistent and difficult business conditions.”

Investec economist Lara Hodes said the domestic labour market conditions continued to remain sluggish, with weak economic growth prospects weighing on consumer and business confidence, detracting from critical fixed investment in the economy.

“A focus on job creation, specifically within the youth segment of the economy, which has the highest levels of unemployment, remains a key priority of government,” Hodes said.

“This was reinforced recently by the National Treasury in their economic transformation, inclusive growth, and competitiveness report which highlighted a series of crucial growth enhancing reforms to support economic transformation and drive labour-intensive growth.”

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