Jobs 2013: Informal sector shows SA who’s boss

Almost 24 000 jobs were added to the economy in November and December 2013 as the contribution from the informal sector becomes increasingly significant, according to the latest Adcorp Employment Index.

With 23 861 jobs created during November and December, the biggest gains occurred in the informal sector, which added 12 722 jobs during the two-month period, recruitment agency Adcorp said in a release on Monday.

The temporary work sector added 5 922 jobs during this period and, for the first time in 16 months, permanent work grew as well, adding 5 271 jobs.

"Since January 2013, the informal sector has added 73 799 jobs, compared to a total decline of 241 536 permanent and temporary jobs, reflecting the growing importance of the informal sector in the South Africa labour market," Adcorp said. "Significant job gains were observed in construction (+7.4%) and transport (+6.5%). The jobs recovery was uneven, with the financial sector shedding 13 000 jobs and the mining sector shedding 1 000 jobs."

In its Employment Index, Adcorp also estimated that 359 000 high-skilled South Africans returned to the country since 2008.

Wage-rate analysis
Adcorp's estimate is based on an analysis of the wage rate of high-skilled workers to estimate changes in supply of these workers. By using data from Adcorp's recruitment subsidiaries that specialise in placing high-skilled personnel (workers who earned more than R400 000 per annum in 2013) the company calculated the estimated number of South Africans who have returned from abroad since the global financial crisis began in 2008.

This finding, with Adcorp's 12% market share in mind, is extrapolated for the rest of the economy to determine a national estimate.

The research assumes there is a relatively stable demand for high-skilled workers based on findings of earlier research, and also an inability to supplement the local skills shortage using foreign high-skilled workers, given strict immigration measures adopted by the home affairs department.

Adcorp found the average real (after-inflation) wages of high-skilled workers increased from R265 680 per year in 1997 to R423 730 per year in 2013 – an above-inflation increase of 5.1% per annum. 

But "since the onset of the global financial crisis in 2008, wages of high-skilled South Africans has declined by 23.0% in after-inflation terms. This decline is consistent with an increased supply of 359 000 additional workers," the report says.

Supply and demand of labour
Labour analyst at Adcorp Loane Sharp explained the wages were the intersection between demand and supply. "If the demand for labour comes down, the wages come down. If the demand for labour goes up, wages go up."

Adcorp found the estimate to suggest a number of things: South Africa's skills shortage is substantial; restrictions on foreigners living and working in South Africa should be relaxed; living standards in South Africa have remained relatively high during the global financial crisis, and South Africans who emigrated to other countries prior to the 2008 financial crisis were possibly naïve about the security of their jobs in foreign countries. 

Wages, having come down over the past five years, indicates a greater supply of labour, he said.

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