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SA labour market distress to continue

The announcement of a reduced formal workforce in South Africa of 179 000 people in the first quarter clearly signals a labour market in distress as the recession bites.

Shireen Darmalingam, an economist at Standard Bank, said the losses will probably become more widespread as the economy grapples with weaker economic conditions.

“The lagging nature of the labour market serves to remind us that more dire conditions in the profoundly weak economic growth prognosis are likely to manifest in a weaker labour market months from now,” says the economist.

Darmalingam said the challenges facing the government in respect of employment targets and quality of work are likely to be aggravated by the current global recession.

“International practice does, however, rely on cooperation by the private sector to achieve sustainable growth targets. Brace yourselves for a cold period ahead with lower income growth and further losses in the employment,” said Darmalingam.

The data released on Tuesday showed that South Africa’s formal jobs dropped by 2,1%, or 179 000 people, in the quarter to March to an estimated 8,333-million employees.

The jobs decline was 1%, or 84 000, year-on-year, after a y/y increase of 1,2%, or 102 000, in the fourth quarter of last year.

Added to this negative set is that the recent Q1 09 Labour Force Survey, which tracks both employment and unemployment trends in the domestic economy, showed that a total of 228 000 jobs were shed in both the formal and informal sectors.

As expected, the data showed a rather dramatic drop of 5% y/y in the manufacturing industry — 66 000 workers — to 1,246-million. The manufacturing sector lost 29 000 jobs, or 2,3%, q/q.

The finance, insurance, real estate and business services sector lost 2,2% q/q and 0,6% y/y after a q/q fall of 0,5%, but a 2,2% y/y rise in the fourth quarter. The losses amounted to 43 000 on the quarter and 12 000 on the year to a total 1,871-million employees.

Wholesale and retail trade lost 3,8% q/q and 3,3% y/y to 1,681-million employees. The losses amounted to 66 000 on the quarter and 58 000 on the year.

The mining sector fell by 3,5% q/q, or 18 000, and lost 1,6% y/y.

The electricity, gas and water supply industry showed an increase of 1,7% q/q, or 1 000, to 60 000 and was up 3,4% y/y, or 2 000.

The construction industry gave back 4% q/q and 2,8% y/y, or 19 000 and 13 000 employees respectively, to 455 000.

The community, social and personal services industry of 2,163-million employees showed an increase of 0,2% q/q and 3,7% y/y, or 4 000 and 78 000 employees respectively.

However, the gross earnings of this sector were down 2,6% q/q to R78-billion, but were up 16,9% y/y, or R11,3-billion.

The earnings in the finance and real estate sector fell by 2,2% q/q and 0,6% y/y to a total 1,871-million employees.

When added up, signs of the cold front are spreading rapidly across key economic growth sectors and the only hope now is that conditions start thawing sufficiently in the United States for trade to liven up. If that only happens in 2010, then the 2009 outcome does not look good on the jobs front, especially if the larger sectors like finance, real estate, construction and retail remain in the doldrums. – I-Net Bridge

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Evan Pickworth
Guest Author

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