Job losses rise as economy slides

THE formal sector shed a staggering 161 000 jobs between the second quarters of last year and this year‚ indicating how tough economic conditions are starting to bite.

Formal jobs are important as they usually carry benefits and make a sustained inroad into unemployment.

The sector also employs more people‚ so if jobs are lost there‚ it means SA’s 25% unemployment rate will persist for longer.

In the second quarter of this year 1 000 jobs were lost when the economy contracted 1.3%‚ Statistics SA’s quarterly employment statistics survey showed.

“These job losses simply mean that our targets in the National Development Plan to reduce unemployment to 14% by 2020 are becoming more difficult to achieve‚” Nedbank economist Isaac Matshego said.

But Stanlib chief economist Kevin Lings said the figures should be viewed with caution.

They were “heavily distorted” by the fact that the government increased employment by 100 000 temporary jobs in the second quarter of last year due to elections in May.

Investec economist Kamilla Kaplan said the large number of resignations by public servants due to uncertainty over pension reforms could also have affected the numbers.

But jobs were also shed in manufacturing‚ transport‚ business services and construction.

While most sectors were most likely affected by rising input costs and low commodity prices‚ those in business services might have been hit by new labour broking regulations.

Research had shown that half of the workers employed through labour brokers lost their jobs‚ while a far smaller portion got permanent jobs after amendments to the Labour Relations Act restricted the employment of temporary workers.

Economic growth has been slowing and business confidence is weak – factors that indicate the private sector will not create jobs either.

If people are without jobs‚ they do not spend‚ which negatively affects spending and lowers economic growth prospects. — BDLive