Rebound In Unemployment Rate Calls For Urgent Interventions, Says SEIFSA

Johannesburg, 14 May 2019 – The quarterly labour force survey (QLFS) employment data released by Statistics South Africa (Stats SA) today – reflecting a rebound in the unemployment rate for quarter one of 2019 –  is a reality check for all South Africans following the outcome of last week’s elections and highlights the mammoth task still facing policy makers in dealing with the scourge, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger said this afternoon.

Speaking after the release of the data, Ms Kruger said the results of the QLFS, which is a broader household-based sample survey that captures labour market activities of persons aged 15-64 years, highlights the urgent need for targeted interventions to address the fundamental factors inhibiting job creation in South Africa.

Despite the worrisome performance of the aggregate employment numbers, a nuance of the data showed that the manufacturing sector, of which the metals and engineering (M&E) sector is part, encouragingly gained 0,8% of total employment or 14 000 jobs between Q4 2018 and Q1 2019, with employment increasing from 1 766 000 during the period spanning October to December 2018 to 1 780 000 during the period spanning January to March 2019. However, on a year-on-year basis, the manufacturing sector lost an alarming 69,000 jobs, representing 3.7%.

On aggregate, the quarterly labour force review showed that over 86 000 jobs in total were lost on a year-on-year basis between January-March of 2018 and January-March of 2019, amounting to 0,5% decrease.

“This is disconcerting as the data increases the official unemployment rate to 27,6%, which is counter-productive to the objectives of the National Development Plan aimed at reducing the unemployment rate to 15% by 2030. Moreover, the high unemployment level and, by extension, a corresponding low productivity must have impacted negatively on economic growth in the medium term. The data makes it difficult to predict a significant improvement in the anticipated Q1 2019 GDP numbers, which may confirm that SA is on a firm trajectory to improve on last year’s annual GDP growth of 0.8%,” Ms Kruger said.

She added that the persistent decrease in employment highlights the need for a targeted intervention by policy makers, including the creation of a platform to urgently implement the recommendations made at the last jobs summit. She said the unemployment situation spans all industrial sectors and is a national crisis which needs to be addressed collectively by all, including the business community.

Ms Kruger said that, in the same breath, continuous support for struggling businesses via various forms of interventions is important to achieve and maintain higher economic growth, since employment levels are generally supposed to increase or decrease on the back of higher or lower economic activity.

“As South Africans collectively seek sustainable solutions to the unemployment problem at the macro-level, there is a need also to encourage targeted entrepreneurship or self-employment  for the lower skills base  at the micro-level, aimed at providing solutions to existing challenges faced by the local communities, or promote opportunity-driven – rather than necessity-driven – entrepreneurships  since they cater largely for sustainable informal employment,” Ms Kruger concluded.

SEIFSA is a National Federation representing 23 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.

Related Articles