South Africa's labour market in 'shambles'

Total employment grew at its fastest rate in eight months in November, the latest Adcorp Employment Index has found.

According to the index, released on Thursday, employment grew at an annual rate of 3.41% in November with all employment categories reporting growth.

“All employment categories reported growth, the fastest being the informal sector [4%], temporary work [3.8%] and permanent jobs [2.8%].”

Agency work lagged behind at 2%, possibly reflecting “legislative and regulatory uncertainties” regarding labour broking.

Significant job growth was recorded in the distribution and logistics sector, 18.1%, the retail sector, 8.7% and financial services, 8.2%.

By contrast, sharp declines in employment were observed in mining, -15.7%, and manufacturing, -5.4%.

Demand for skilled workers increased sharply, notably for managers and professionals. This reflected the economy’s ongoing re-orientation toward high value-added services sectors.

Demand for clerks, 9.1% and service workers, 4.7%, increased too.

Adcorp also said a rethink was needed on South Africa’s “shambles” of a labour market.

“By any measure, South Africa’s labour market is a shambles,” said the company, which claims to place “high quality people into all kinds of employment”.

“Labour market outcomes—including the most important one, unemployment—are terribly poor and some kind of re-think of the South African labour market is surely in order.” Adcorp said about 8.5-million people were out of work or underemployed.

At the same time labour productivity had fallen to the lowest level in 40 years.

“Last year, South Africa lost nearly double the number of work days due to strikes and work stoppages than at the height of rolling mass action under apartheid.

“Currently, labour’s share of national income—wages as a percentage of total factor income—is at a 50 year low.” Over the past three years, wages had risen by 11% per annum on average, treble the consumer inflation rate over the period.

Growing numbers of employers were now using automation, mechanisation and other labour-saving methods as an alternative to labour with the result that the economy’s capital intensity had risen sharply.

Against this backdrop, there was considerable disagreement over whether South Africa’s labour laws were restrictive or not.

Laws most restrictive
“According to the World Economic Forum, some aspects of South African labour law are among the most restrictive in the world.

“The International Monetary Fund believes that some aspects of South African labour laws need to be relaxed and even the drafters of the Labour Relations Act have called for labour law reforms.”

Adcorp said employers only hired additional workers if it was economically sensible or profitable to do so.

On an economy wide level, widespread unemployment implied that businesses could not profitably employ people. A particularly problematic law as far as labour productivity was concerned was one which protected workers against performance-related dismissals.

“Many employees shrug off their workplace duties, often boldly citing the CCMA [Commission for Conciliation, Mediation and Arbitration], and hide behind the law, in which situation employers—especially small employers who do not possess the legal means—are helpless,” Adcorp said.

It appeared that many of the one million-odd jobs lost during the 2009 recession “for operational requirements” were in fact dismissals for poor performance that had cumulated over the preceding years and for which the recession provided a helpful guise, the company said.—Sapa


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