JOHANNESBURG, 31 JULY 2018 – The employment data released by Statistics South Africa (StatsSA) today is indicative of an economy under duress and highlights the mammoth task facing stakeholders in an upcoming jobs summit in the latter half of this year, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Chief Economist Michael Ade said.
Dr Ade said the results of the quarterly labour force survey (QLFS) – which is a household-based sample survey that captures labour market activities of persons aged 15-64 years – indicates an urgent need to address the fundamental factors inhibiting job creation in the country.
The employment data showed that the manufacturing sector, of which the metals and engineering (M&E) sector is part, lost 5,7 percent of total employment or an alarming 105,000 jobs between Q1 2018 and Q2 2018, with employment, decreasing from 1 849 000 during the period spanning January to March to 1 744 000 during the period spanning April to May 2018.
The quarterly employment statistics showed that 55 000 jobs in total were lost on a year-on-year basis between April-June 2017 and April-June of 2018, amounting to a 3,1 percent decrease.
Dr Ade said although the general South African working-age population increased by 0,4 percent, the number of employed persons correspondingly declined by 90,000.
He said this was a cause for concern as the data officially raised the domestic unemployment rate to 27.2%, which runs counter to the objectives of the National Development Plan to reduce the unemployment rate to 15 percent by 2030.
“Considering the official unemployment rate for Q2 2018, which is a lag indicator, it is difficult to predict a huge turnaround in the much-anticipated Q2 GDP numbers, which shouldconfirm that SA is out of a technical recession,” Dr Ade said.
He said the decrease in employment highlighted subdued domestic demand conditions and structural challenges faced by most industrial sectors against the backdrop of an increasingly uncertain global growth. He said the situation was not helped by the fact that local companies have been operating with excess capacity and at sub-optimum production levels as they tried to minimise input costs, including uncontrollable fuel and energy costs. These had negatively impacted on both formal and informal employment numbers.
“The numbers further highlight the existing trade-off between two key macro-economic variables, employment and economic growth. Employment levels are generally supposed to increase or decrease on the back of higher or lower economic activity, and this has not been the case for a long time. SEIFSA is also concerned about the socio-economic impact of high levels of unemployment compounded by decreasing GDP-per-capita since 2016.
“It is increasingly clear that the onus of finding a lasting solution to the skyrocketing unemployment numbers does not only rest with the government. As we shift our focus to the up-coming jobs summit, the high unemployment rate provides food for thought for all South Africans, who have to collectively seek sustainable solutions to the unemployment problem. Accordingly, opportunity-driven (rather than necessity-driven) entrepreneurship should be encouraged since it caters largely to sustainable
informal employment,” Dr Ade said