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South Africa – Permanent job market in deep crisis, temporary market more stable

10 October 2013

Job shedding in the permanent jobs market accounted for 95.4% of all job losses in September according to the latest Adcorp Employment Index. The index shows that the South African economy shed 74,523 jobs during September.

The biggest job losses occurred in the permanent jobs sector, which dropped by 71,099 during the month. Temporary jobs declined by a relatively small 3,424, and agency work shed just 319 jobs over the same period.

Since January 2013, the formal sector has shed 260,826 jobs whereas the informal sector has created 48,828 jobs. Sharp job losses were observed in mining, manufacturing, and financial services sectors, amounting to 30,000 job losses between them.

Adcorp believes that the current malaise around unemployment could play a significant role in the outcome of the 2014 elections.

Loane Sharp, Adcorp Labour Economist for Adcorp, said: “It is clear that nothing affects the national political mood more than the sense of security that people feel in their jobs. The swing factor for the 2014 election will come from established workers who have lost faith in their trade unions and who have developed a kind of ’strike fatigue.”

His conclusions are based on the decline in both union membership and union member participation in strikes.

“The emerging black middle class has the most to lose from uncertain job prospects, because all of the things that the middle class values – political conservatism, property ownership, retirement saving, quality education, insurance against personal adversity, and so on – depends on having a stable and secure job,” said Mr Sharp.

Two important indicators of the cyclical health of the labour market – namely the involuntary retrenchment rate, which is at an all-time high and the rate of voluntary job changes, which is at an all-time low – suggest to Mr Sharp that the job market is in a deep crisis.

He added: “The number of strikes and the number of workdays lost due to strikes,and work stoppages has increased steadily in recent years. Just three years ago, the annual strike season lasted fewer than three months whereas now it lasts more than 10 months of the year. The number of economic sectors involved in strikes has expanded greatly.”

A slew of economic indicators, including manufacturing and mining production, export volumes and the exchange rate of the Rand, clearly show the adverse impact of strikes.

A growing number of notable voices – including the World Economic Forum (WEF), the International Monetary Fund (IMF), the secretary-general of the ANC, and even the drafters of the original Labour Relations Act of 1995 – have decried the perpetual conflict in South African labour relations Mr Sharp added. 

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