Formal sector sheds 28‚000 jobs in second quarter

18 Sep 2013

Formal sector employment disappointed in the second quarter‚ leading to concerns the country will not meet its targets of halving unemployment by 2020.

SA has one of the highest unemployment rates among developing markets‚ with 25.6%‚ or 4.7m‚ of the labour force unemployed.

The sector shed 28‚000 jobs in the second quarter to an estimated 8.437m from an estimated 8.465m in the first quarter of 2013‚ Statistics SA's (Stats SA) Quarterly Employment Statistics (QES) survey showed on Tuesday (17 September).

Formal sector employment‚ however‚ grew on a year-on-year basis. Figures showed the sector added 7‚000 jobs to 8.437m in the quarter ended June compared with 8.430m in the same quarter last year.

The decrease was despite gross domestic product (GDP) having increased at an annualised 3% in the second quarter.

"A rebound in GDP growth in the second quarter should have boosted prospects for employment growth‚" Standard Bank economist Shireen Darmalingam said in a research note. "However‚ as the lack-lustre trends since 2011 attested to‚ strong economic growth does not guarantee concomitant employment growth."

Job losses continue

Stats SA said most jobs were lost in the community‚ social and personal services sectors mining and manufacturing industries.

There was a quarterly decrease of 13‚000 employees (-0.5%) in June compared with March mainly because of decreases in employment in central government activities; government departments; education; and other service sectors.

"The overall trend in government employment seems to have been reasonably steady and supportive of our view of only modest over-spending on the government wage bill in the current fiscal year‚" Macquarie SA economist Elna Moolman said.

The manufacturing industry reported an annual decrease of 3‚000 employees (-0.3%) in June and there was a quarterly decrease of 5‚000 employees (-0.4%) in June compared with March.

Darmalingam said mining production was unlikely to pick up significantly in the second half of the year as mining inflation remains high‚ with rising labour and electricity costs affecting profitability.

Gross earnings paid to employees during the quarter ended amounted to R384.3bn‚ reflecting a quarterly increase of R7bn or 1.8% compared with the first quarter. This reflected an annual increase of R31.9bn (9.1%) compared with the same quarter last year.

The survey reflected a quarterly increase of 4.2% in average monthly earnings in the formal sector between February (estimated at R13‚908) and May (estimated at R14‚498).

Source: I-Net Bridge

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