/ 13 June 2011

Employment numbers drop in May

Employment declined for the first time in five months due to sharp drops in jobs in the construction and manufacturing sectors, according to the latest Adcorp Employment Index released on Monday.

“Employment dropped last month at an annual rate of 2.5% and we ascribe this decline — the first in five months — to a significant drop in employment in the construction (-20.1%) and manufacturing (-11.0%) sectors, as well as a small drop in government employment following the local government elections (-2.7%) last month,” said Loane Sharpe, Adcorp labour market analyst.

High-skilled employment increased by 4.5%, while low-skilled employment dropped by 3.7%.

“Employment of machine operators and elementary workers dropped sharply, by 14.9% and 12.9% respectively,” Sharpe said in a statement.

Adcorp said that based on World Economic Forum (WEF) data, South Africa’s labour market competitiveness fell by 8.1% over the past year.

“The WEF has revealed that South Africa’s international ranking fell from 123rd (an effective score of 11.5%) in 2008 to 133rd (4.6%) in 2011 in terms of the competitiveness of the country’s employment market,” Sharpe said.

“South Africa’s labour laws and regulations are now the seventh most restrictive out of 139 countries in the world.

“According to a survey of the world’s 1 000 largest multinationals, restrictive labour regulations are the fourth most problematic factor for doing business in South Africa.”

Sharpe was critical of the National Planning Commission’s (NPC) finding that South Africa’s labour laws “are not the principal cause of high unemployment … These laws are not overly rigid relative to either developed or developing countries”.

The NPC said these findings were backed by the International Labour Organisation, the Organisation for Economic Cooperation and Development, and the International Monetary Fund.

“We pinpoint the problem with the NPC conclusions as one that flows from research produced or heavily-funded by government bodies, including our universities,” said Sharpe.

“Under the sheer volume of academic, government and trade union research, much of it funded and supported by the South African government, businesses’ overall attitude toward South Africa’s labour laws is relatively unknown.”

However, recently “a raft of anti-business labour law amendments” was proposed at the National Economic Development and Labour Council which elicited negative response.

The WEF could be taken seriously as it “represents the views of large, global businesses accounting on their own for more than 20% of foreign direct investment flows into developing countries”.

By separating the WEF’s overall labour market efficiency ranking, Adcorp said South Africa’s regulated — or government-controlled or influenced — labour market ranked 133rd in the world.

South Africa’s unregulated — or private sector — ranked 64th in the world.

South Africa performs poorest against firing practices (135th), labour unrest (132nd) and wage inflexibility (131st). — Sapa