Unemployment ‘a sign of deeply troubled economy’

THE STEEL and Engineering Industries Federation of Southern Africa (Seifsa) said South Africa’s employment statistics showed signs of a “deeply troubled economy” and was a serious cause for concern.

This comes after Statistics SA released its quarterly employment statistics showing that employment decreased by 31 000 quarter-on-quarter, from 9 620 000 in June to 9 589 000 in September, a 0.3% decrease.

Seifsa chief economist Michael Ade said the data showed the manufacturing sector lost 0.4% of total employment, or at least 5 000 jobs in the third quarter of 2017.

Ade said 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 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.

“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% in quarter three of 2017, the benefits did not translate to an increase in employment,” Ade said.

“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.” – African News Agency/ANA