Formal sector losses more jobs in 2nd Quarter
•According to the Quarterly Employment Survey (QES), which measures employment in the formal sector, the number of jobs decreased by 1000 in the 2nd quarter compared with the 1st quarter, which itself had recorded a loss of 41,000 jobs.
•On a y-o-y basis, there was a loss of 161,000 jobs in the formal sector in the 2nd quarter, reflecting y-o-y growth of -1.8%. This compares with positive growth, albeit woefully weak, of 1.6% in GDP over this period. These figures emphasise the manner in which the economy is moving towards ever more capital intensity at a time when millions of persons are unemployed. It casts aspersions on the structural weaknesses of the economy which are driving such a situation.
•The National Development Plan was directed at creating 5m "decent" jobs by 2020 through appropriate focus on education and skills development, the creation of small business activity through incentives and reduced regulation and also through an improvement in industrial relations. Clearly, the government has not been able to implement the Plan as envisaged, leading to the current situation of jobless growth.
•What appears to be exacerbating the shortfall of decent job creation relative to economic growth is the fact that it is no longer only the private sector which is shedding jobs. Judging from the -5.3% y-o-y decline in employment in "community and social services", the government has joined the fray as it seeks to stick to its budget deficit reduction programme in the face of exorbitant pay awards to public servants. It is no coincidence that the decline in employment in community services in the 2nd quarter coincided with this sector being characterised by one of the biggest increases in remuneration per employee.
•The reason why the overall unemployment rate is not increasing still faster would appear to be that many of the jobs being lost in the formal sector are resulting in persons getting involved in the informal sector to eke out a living. However, this runs contrary to the government's objective of creating "decent" jobs.
Source : Econometrix 29/09/2015