SA economy sheds more jobs

[] — ANOTHER 49,306 jobs were lost in August, the fourth consecutive monthly decline, while only government created jobs, according to the latest Adcorp Employment Index released on Monday.

“… while overall employment declined by 2.1% in August – the fourth consecutive monthly decline – employment by government continued to rise, by a notable 6.2%,” Adcorp said in a statement.

“Adcorp considers that one of the prime reasons for the nation’s dismal employment picture is that government is crowding out private sector participation in the economy.

“The public sector now accounts for all the job creation in the economy for 2011 as a whole,” said Loane Sharp, Adcorp labour market analyst.

August employment declined most sharply in the manufacturing (19.9%), mining (19.3%) and construction (16%) sectors.

“The unofficial sector continued to create jobs, employing 16,917 additional people in August, enhancing the ‘informalisation’ of the country’s workforce.”

Sharp said employment conditions remained “exceedingly weak”.

South Africa had now lost 989,239 permanent jobs since the beginning of the 2008/09 recession.

This included 100,087 jobs lost since the economy began to recover in the post-recession period.

Sharp said temporary work could be considered a leading indicator of permanent employment conditions. Job creation tends to lag improvements in the economy by between 24 and 36 months.

Permanent jobs – which made up 47.3% of all South African jobs – were only created when certain economic conditions, including sustained high economic growth, were met, he said.

“The upshot is that temporary work follows economic activity fairly closely (correlation = 79%), since employers are able to use contract workers for fixed, typically short, durations on an as-needed basis.”

Sharp said temporary employment in South Africa represented 29.9% of total official employment. He said temporary employment data could be interpreted by looking at the number of hours worked by a temp in relation to the available hours per temp.

“In August, the capacity utilisation of temporary staff – the number of hours actually worked in relation to the number of hours per temporary worker – dropped to 74.6%, a decline of 8.1% at an annual rate and the worst decline in four months,” Sharp said.

“Compared to a year ago, the number of temps increased by 4.5% in August but their average monthly working hours declined by 20.6%, prompting our ‘exceedingly weak’ prediction for the permanent jobs outlook.”

Sharp said when a temp’s capacity utilisation approached 100%, more temps would normally be employed.

“When the capacity utilisation of all temps across the country approaches 100%, it will usually be followed, either by the creation of more temporary positions, or by the use of permanent workers.”

This was seen between January and December 2010, as the South African economy grew following the 2008/09 recession.

“In January and February 2011, there was a brief lull in temp capacity utilisation, followed by resumed momentum during March and April.”

However, in the past four months this capacity utilisation had declined from 98.3% in April to 74.6% in August, or the lowest level since February. Sharp said this could suggest the South African economy was facing a further recession.