Data points to jobs bloodbath
In one of the first concrete signs of the unemployment bloodbath to come due to the Covid-19 pandemic and accompanying lockdown, data provided by the National Payment System shows a decline of more than 13% in May in the number of people receiving salaries and wages compared with the same period a year ago.
In one of the first concrete signs of the unemployment bloodbath to come due to the Covid-19 pandemic and accompanying lockdown, data provided by the National Payment System shows a decline of more than 13% in May in the number of people receiving salaries and wages compared with the same period a year ago.
Data provided by Bankserv Africa measures the actual takehome pay, net of deductions including income tax and retirement savings contributions, and represents the actual amount transferred into employees’ bank accounts. The data does not measure transfers between employers and employees that use the same bank.
The unemployment rate reached a record high of 30.1% in the first quarter, which translates to more than 7-million people seeking employment and struggling to get it.
The latest Bankserv data shows that in addition to the number of people receiving income in the form of salaries and wages declining from 3.15million in May 2019 to 2.75-million last month (-13%), the overall compensation paid to workers after adjusting for inflation was 7% lower in May than the same month a year ago.
“This is a big indication that many people are losing their jobs and experiencing a reduction in income, and we are now striking the iceberg in terms of the jobs crisis, which could see as many as one in five private sector jobs at risk,” says Mike Schussler of Economists.co.za
Schussler says the data is skewed towards the remuneration of people working for larger companies and the government as it is drawn from payments made through payroll systems.
As a result, it could be at risk of underreporting the extent of what is happening as payroll systems are perceived to be more widely adopted by larger corporates than by small and medium-sized enterprises, which might typically make payments via stand-alone EFTs and cash transfers.
Take-home pay is also more nuanced when analysed by income band and reveals how disproportionately severely lower-income workers have been affected by the crisis.
As an example, the number of people receiving less than R10,000 per month — which includes a large component of casual and weekly paid employees — fell by 13.4% in May year on year.
This contrasts sharply with the number of people taking home more than R40,000 per month — largely salaried, permanent employees — which increased by 8.1% over the same period.
“The people at the higher echelons are feeling relatively well off — they have received the benefits of the tax breaks provided in the budget speech and some of them have suspended provident and pension fund contributions. However, with the retrenchment notices being filed, one does suspect that monthly paid employees will also start to feel the impact,” says Schussler.
On his calculation, one in five private sector jobs are at risk based on his projection that 1.8million jobs could be lost in the next few months in the private sector, which employs about 10.5-million people.
“Unemployment is a lagging indicator. Following the global financial crisis, which started in November 2008 with the collapse of Lehmans, unemployment only peaked in SA more than a year later in the second quarter of 2010,” he says.