JOHANNESBURG, 13 FEBRUARY 2017 – The employment data released today by Statistics South Africa (Stats SA) – showing a mild slowdown in the unemployment rate, amidst slowly improving optimism in the broader economy – can be misleading when analysed comprehensively, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Chief Economist Michael Ade said today.
He said the household-based Quarterly Labour Force Survey (QLFS) released by Stats SA showed that the unemployment rate slowed from 27.7% in quarter 3 of 2017 to 26.7% in quarter 4 of 2017, reflecting a slight improvement of 1.0 percentage point when quarter 4 of 2017 is compared to quarter 3 of 2017. On a year-on-year basis, the data show a slight increase in the unemployment rate by 0.2 percentage points.
Dr Ade said the manufacturing sector, which is inclusive of the Metals and Engineering (M&E) sub-sector, was one of three sectors which recorded employment gains. It recorded an increase of 42 000 jobs during the quarter and 63 000 jobs in the year, representing 2.4% and 3.7% quarter-to-quarter and year-on-year changes respectively. A modest improvement in the employment numbers of industrial production was recorded.
On a quarter-to-quarter basis, industrial production recorded a net gain of 3000 jobs, followed by an impressive year-on-year net gain of 71 000 jobs.
Dr Ade said lthough construction employment had performed poorly on a year-on-year basis, the sector had recorded an increase in employment of 26 000 jobs in quarter 4 when compared to quarter 3 of 2017, highlighting the seasonal effect and up-tick in employment, driven by a slight increase in construction works.
He said a nuance of the aggregate data showed a corresponding increase in economically inactive job seekers both on a quarter-to-quarter basis and on a year-on-year basis, with the data also revealing that the working-age population grew by 152 000 or 0.4 percent, while the labour force congruently declined by 351 000 persons.
“This means that there is basically a re-allocation from the unemployment cue to the despondent cue. On a year-on-year basis, the total number of economically inactive individuals increased by 419 000, representing a 2.8% change. In this mix, the portion of discouraged work seekers (246 000) outweighs the number of other economically inactive (173 000) individuals.
“This is a cause for concern and a need still exists to continuously analyse the underlying unemployment dynamics with the aim of seeking a workable solution,” said Dr Ade.
He said while it was clear that challenges which inhibited the economy from absorbing the increasing numbers of unemployed still persisted, compounded by both seasonal and cyclical unemployment, there was an urgent need to address issues relating to structural unemployment and skills mis-match between available jobs and skill levels in the country.
Dr Ade said the slight gains in employment recorded in most industrial sectors were expected to be reversed in the first quarter of 2018 since most job opportunities during the festive period were seasonal.
“This places more emphasis on the need to continuously improve on business confidence and sentiments and simultaneously boost consumer spending aimed at expanding the domestic economy. The potential benefit will trigger new investments into industrial sectors with the potential of creating new sustainable jobs across all industrial sectors,” Dr Ade said.