Not working: jobs gloom grows
● Data for the third quarter of 2019 due this week is expected to reflect the uphill battle the economy faces to shrink the unemployment rate, which ballooned to its worst level in two years in the second quarter.
Economists expect the rate to remain constant at 29% or to deteriorate.
Nicky Weimar, senior economist at Nedbank, said: “If there is an improvement I’d be surprised. If anything [the data could be] even slightly worse. From all the conversations we’ve had with companies and clients, the pressure on cost structures is immense, the pressure on profitability is very real.”
Andrew Levy, managing partner at Andrew Levy Employment, said: “Our problem is that we just don’t have the economic growth rate to create employment, and as long as our growth rate remains less than 1% nothing will change. We need to grow at 6% or 7% for a decade and a half in order to bring a smile to everyone’s face.”
Absa economists said in a note to clients: “The Bureau for Economic Research’s hiring intentions survey results suggest significant downward pressure on jobs.”
Trading Economics, an economic research platform, forecasts the unemployment rate to have deteriorated to 29.4%.
Haroon Bhorat, professor of economics and director of the development policy research unit at the University of Cape Town (UCT), says the economy has created 5.2million jobs since 2001.
“The overwhelming majority of these jobs have come from the tertiary sector. Agriculture and mining have shed jobs dramatically. Manufacturing employment has been abysmal. We are now a services-dominant economy in both GDP and employment terms,” Bhorat said.
Between 2001 and 2018, the primary sector recorded 484,000 job losses, according to data from UCT’s research unit.
Close to a third of SA’s jobs are in the public sector, Bhorat said.
“You’ve got these binding constraints on the private sector and it’s very basic things — it’s access to a cost-effective and reliable source of energy, it’s not a luxury, it’s a necessity — and that’s where we are now,” said Weimar. “That makes it very difficult to create jobs …”
Levy said high wage settlements had historically added to unemployment trends but settlements had trended downwards.
“Union [settlements] have been outperforming inflation but that margin is narrowing. There’s no question that workers at all levels are being squeezed,” he added.
Earlier this week data from the Pietermaritzburg Economic Justice & Dignity Group’s Household Affordability Index for 2019 showed that a general worker earning the national minimum wage at the 10% exemption level and working for a full 23 days earned R3,312 per month. Transport and electricity costs accounted for 57% of the wage, leaving R1,425. 48 for all other expenses, including food.