SA lost 67 000 formal sector jobs in Q2 2016, according to Stats SA, but has gained 30 000 formal jobs over the past year. SA reporting of employment data needs to be a lot more rigorous

Stats SA released the Q2 2016 Quarterly Employment Statistics (QES) today. According to the report, formal (non-agricultural) employment in SA fell by 67 000 jobs in the second quarter of 2016, quarter-on-quarter, after declining by 3 000 jobs in the first quarter. Over the past year, formal sector employment is actually up 30 000 to 9.218 million.

Unfortunately, because the QES data series was heavily revised recently (see note in italics below), and does not link-back to the historical time-series, it is pointless trying to distribute any charts that capture trends in formal sector employment, as measured by industry-based surveys. In particular, the new data series on formal sector employment reflects a step-change increase in employment of roughly 300 000 jobs, without backdating the data, making any longer-term trend analysis futile. Hopefully, the new data series can be maintained on a consistent basis, although there is still a large gap between the QES measure of formal sector employment and the LFS measure.

(At the end of 2014 Stats SA heavily revised the QES data. The new formal sector employment data series is now based on a sample drawn from the 2013 Business Sampling Frame (BSF) of Stats SA which contains enterprises registered for Value Added Tax (VAT) at the South African Revenue Service (SARS). South Africa’s employment data is still not seasonally adjusted.

A breakdown of the 67 000 jobs lost in the second quarter of 2016 suggests that most of the jobs (-48 000) were lost in the Community services sector, which is largely government. We know that government has introduced a hiring freeze and is allowing for natural attrition. Most other sectors of the economy also lost jobs in the quarter, but fortunately the job losses were relatively small (the largest being 7 000 jobs lost in the manufacturing sector). The manufacturing and mining sectors, combined, have lost a total of 48 000 formal sector jobs over the past year, whereas the Business Services (which includes the financial services sector) sector has gained 40 000 formal jobs.

Improving the employment outlook remains South Africa’s most important economic objective. In that regard, it would be enormously helpful if the employment data was more consistent and significantly more accurate.

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