Employment decline bottoming out

Johannesburg - The overall employment situation in South Africa is still negative although there are some initial signs that the negative trend may be bottoming out, according to the latest Adcorp Employment Index (AEI) released on Tuesday.

The index revealed an overall third quarter decline of 0.4% and a year-on-year decline of 18.4%.

The AEI reflected the following trends:

• The macroeconomic component of the index reflected a marginal quarter-on-quarter decline of 0.4% indicating a further softening of macroeconomic fundamentals in the South African economy, although the rate of decline had slowed dramatically which may be indicative of a bottoming out of overall economic decline.
• The demand component of the index indicated that the demand for labour was still in negative territory and recovery in the labour market may lag overall economic recovery. In this regard, the AEI Demand Index reflected a quarter-on-quarter decline of 1.3% or 13.5% year-on-year.
• The supply component of the index remained unchanged, and for the third consecutive quarter, supply of labour exceeds the demand for labour.

• The remuneration component of the index was up quarter-on-quarter by a factor of 1.2%. This was largely due to the impact of inflation-beating wage increases in certain sectors due to high wage demands by organised labour.

According to the index, a major contributing factor to the continued negative state of employment in the country has been the marked decline of economic activity in the manufacturing sector.

In spite of reports of a possible resurgence of economic activity in this sector, demand for labour in the manufacturing sector was down by 11.4% quarter-on-quarter and 39.5% year-on-year.

Economic conditions and demand for labour in the construction sector remained relatively unchanged.

The mining, retail and wholesale trade sectors had, however, improved slightly with finance, real estate and business services showing the most promise for recovery.

"The Index shows that we remain in negative to, at best, neutral territory. The strong declines seen in the previous quarters have not been repeated this quarter.

"As employment tends to lag economic activity, we need to see two or three quarters of sustained, improved economic activity before the overall employment situation in the country moves into more positive territory," said Adcorp CEO Richard Pike.

- I-Net Bridge