JOHANNESBURG, 12 DECEMBER 2017 – The employment data released by Statistics South Africa (StatsSA) today indicates a deeply troubled economy and is a serious cause for concern, the Steel and Engineering Industries Federation of Southern African (SEIFSA) said.
SEIFSA Chief Economist Michael Ade said the StatsSA data showed that the manufacturing sector, of which the metals and engineering (M&E) sector is part, lost 0.4 percent of total employment (5000 jobs) in quarter 3 of 2017, with employment decreasing from 1 181 000 in June to 1 176 000 in September 2017.
Dr Ade said the quarterly employment statistics released by StatsSA showed that 31 000 jobs in total were lost between the second quarter (Q2) of 2017 and the third quarter (Q3) of 2017, amounting to a 0.3 percent decrease. Between the third quarter (Q3) of 2016 and the third quarter (Q3) of 2017, an alarming total of 83 000 jobs in total were lost, representing 0.9 percent of jobs lost.
He said that “Given that the recently published real GDP figure for the 2017 quarter 3 (Q3), revealed a stronger-than-expected growth relative to quarter 2 (Q2), the decrease in employment for the same period highlights subdued domestic demand conditions and structural challenges faced by most industrial sectors. Of specific concern is that, despite the positive contribution made by the manufacturing sector towards an improvement in real GDP growth, which contributed
4.3 percent in quarter three of 2017, the benefits did not translate to an increase in employment,” he said.
Dr Ade said that the data confirmed a direct negative correlation between employment numbers and manufacturing production, as companies chose to utilise existing excess capacity and more capital in productive processes.
He said the 31 000 jobs lost in quarter three (Q3) in 2017 relative to quarter two (Q2) of 2017 represented the net number resulting from decreases in most sectors and increases in only two sectors. Employment in the primary sector – as exclusively represented by formal mining employment – had decreased by 9 000, while the secondary sector had recorded a net employment decrease of 2 000 and the tertiary sector had recorded a net decrease of 20 000 in quarter three (Q3) in 2017.
“These are worrying numbers, given the existing trade-off between employment and economic growth. This highlights the need for multiple approaches to the unemployment problems facing South Africa. Employment levels are generally supposed to increase or decrease on the back of higher or lower economic activity, and the current employment numbers do not paint an encouraging picture,” said Dr Ade.
He said that while employment in industrial production generally decreased, the numbers for the construction sector increased by 4000 from quarter two (Q2) of 2017 to quarter three (Q3) of 2017. He said while employment in the construction sector generally seemed to be volatile, largely affected by the number of projects in progress, the up-take in employment in the sector in the run-up – driven by a slight increase in construction works – to the festive season was encouraging.
He attributed the decreased employment in the manufacturing sector largely to volatile output and structural challenges inhibiting industries from benefiting from improving global demand and employing more labour. He said this was compounded by both frictional and seasonal unemployment dynamics.
Dr Ade said the country desperately needs positive business sentiment, better consumer and business confidence as well as improved investor confidence to trigger new investments to create jobs in manufacturing and across all industrial sectors in the new year.
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