According to Stats SA, formal (non-agricultural) employment in SA rose by a very modest 5 000 jobs in Q1 2012; based on today’s release of the Quarterly Employment Survey (QES). This follows a slightly more encouraging increase of 21 000 in Q4 2011, 58 000 in Q3 2011, 11 000 in Q2 2011 and 38 000 in Q1 2011.
Over the past year, SA has added 95 000 formal sector jobs. While this is a reasonable outcome given the difficult world economic conditions, it is far below the level of job creation required for South Africa to meaningfully reduce the rate of unemployment. More positively, SA has created 298 000 formal sector jobs in the past two years, with job gains in each of the past 8 quarters.
A breakdown of the 5 000 job gains in Q1 2012, indicates that the retail sector shed 22 000. This is mostly due to seasonal factors. Typically the retail sector sheds jobs at the start of each year, after increasing employment during the end-of-year festive season. Over the past year the retail sector has actually created 33 000 jobs.
There was also a disappointing decline in manufacturing employment (-1 000), despite the relatively buoyant Q1 2012 manufacturing data reported by Stats SA. More recent data, though, suggests that the manufacturing sector is under pressure again, partly impacted by the sustained economic weakness in Europe. Over the past year, manufacturing has shed 3 000 jobs.
On the plus-side, the community sector (which includes government), added 15 000 jobs in Q1 2012. Despite this rise, the sector has shed 10 000 in the past year. Construction added a welcome 4 000 jobs in Q1 2012 and appears to be slightly more stable after a very difficult 2008 to 2010.
(The quarterly changes in employment are not seasonally adjusted. The seasonal variation in employment can be very meaningful, especially in sectors such as retail trade when measured between the final quarter of the year and the first quarter of the following year).
Overall, while formal sector employment appears to have at least stabilized relative to the extreme weakness in 2009 and early 2010; the level of improvement remains very modest. Consequently, the overall level of unemployment remains absurdly high by international and historical standards (whether the assessment is based on the QES or QLFS survey) and is clearly SA’s number one economic concern. Approximately 500 000 people (net) enter the labour force each year in South Africa.
Clearly, job creation is not merely a function of the cost of capital or even the cost of labour. A range of important policies play a crucial role in facilitating job creation, including labour regulation, education (skills development), competition policy (regulation of industry), industrial policy, trade policy, and infrastructure development. SA’s high unemployment requires a far more complete and bolder solution, that has the role of the private sector firmly at its core, supported by appropriate infrastructural development.
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