Johannesburg, 26 September 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is seriously concerned about the jobs lost in the manufacturing sector during the second quarter of 2018 and eagerly looks forward to the implementation of the economic stimulus plan announced by President Cyril Ramaphosa last week.
Speaking after the release of the national Quarterly Employment Statistics (QES) today, SEIFSA Economist Marique Kruger said although the employment numbers were depressing, SEIFSA remains optimistic that the economic stimulus package will boost employment numbers going going forward.
The data – which comes from an enterprise-based sample survey by Statistics South Africa – showed that the manufacturing sector, lost 1.1 percent of total employment (-13 000 jobs) in quarter 2 of 2018, with employment decreasing from 1 192 000 in June to 1 179 000 in June 2018. The metals and engineering cluster is an important of the manufacturing sector.
The job numbers in both the mining and utilities sectors were also uninspiring, with both sectors recording a loss of 2 000 jobs and no growth in job numbers respectively. In total, 69 000 jobs were lost between the first quarter (Q1) of 2018 and the second quarter (Q2), amounting to a 0.7 percent decrease. However, between the second quarter (Q2) of 2017 and the second quarter (Q2) of 2018, an encouraging total of 13 000 jobs were created, representing 0.1 percent of jobs created.
“Given that the recently-published real GDP figure for the second quarter of 2018 revealed a weaker-than-expected growth, thus confirming a persistently low demand environment, the decrease in employment for the same period correlates with structural challenges faced by South Africa’s industrial production,” Ms Kruger said.
She added that the consistent decline in employment numbers confirms the poor state of the country’s economy, despite the existence of political will, encouraging rhetoric and initiatives aimed at rejuvenating industrial activities towards economic growth and more employment.
Moreover, Ms Kruger said the dilemma of low growth and high unemployment is compounded by rising petrol prices and persistently high inflation numbers.
“At 5.1%, the headline inflation is tantalisingly close to the South African Reserve Bank’s upper target band, effectively limiting policy makers’ ability to use expansionary monetary or fiscal policy interventions to return the economy to good health,” Ms Kruger said.
She said the Reserve Bank’s decision to leave the repo rate unchanged at 6.5% last week further supports this point, showing the Bank’s sole commitment to the mandate of maintaining price stability, despite the economy needing a rates decrease in order to boost demand.
Ms Kruger said the current low-growth scenario poses a serious challenge to dealing with the unemployment crisis and effectively implementing the President’s economic stimulus plan. She said if growth continues to be subdued, business and investor confidence will continue declining, thus further constricting economic activities and job creation.
“Clearly, these are tough times for both businesses and consumers alike. Hopefully the Medium-Term Budget Policy Statement scheduled for next month will provide some direction for the economy by expounding on both the reprioritisation and fiscal consolidation initiatives taken by the Government,” concluded Ms Kruger.
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