SA facing jobless growth spectre

Johannesburg - Higher-than-inflation wage escalations and increased non-wage employment costs were aggravating unemployment, human capital management group Adcorp Holdings [JSE:ADR] CEO Richard Pike said on Monday.

Speaking at the release of Adcorp's employment index for June, Pike pointed to research showing that between 2001 and 2010, labour productivity fell by 2% per annum, while real remuneration rose by nearly 3% per annum.

By contrast, between 1990 and 2000 labour productivity increased by 3.3% per annum, and real remuneration grew by 1.9% per annum.

"At present, real remuneration is increasing at a rate of 13.8% points above the level that can be justified by inflation and labour productivity growth," Pike said.

Undue wage escalations increased the use of labour-saving alternatives such as automation and mechanisation, thus reducing the economy's overall labour intensity and aggravating unemployment.

"Between 1960 and 2000, every percentage point of economic growth was reliably associated with a 0.62% increase in employment. However, since 2000, apart from extraordinary growth in financial services employment between 2002 and 2006, each percentage point of economic growth was associated with a 0.11% increase in employment."

Additional expenses

However, wage costs were not the only pertinent costs from an employer's perspective.

Various legislative and regulatory measures undertaken during the 1990s had increased non-wage employment costs substantially, said Pike.

These were the Compensation for Occupational Injuries and Diseases Act (1993), the Occupational Health and Safety Act (1993), the Labour Relations Act (1995), the Basic Conditions of Employment Act (1997), the Employment Equity Act (1998), the Skills Development Levies Act (1998) and the Immigration Act (2002), among others.

The total cost of administering SA's new labour laws was just less than R8 400 per employee per year. For a medium-sized enterprise employing 500 people, it was nearly R4.2m per year.

For entry-level workers, whose earnings typically ranged from R30 000 to R42 000 per annum, these non-wage costs represented 20% to 28% of an employer's total employment costs, amounting to R109.2bn per year for the economy as a whole.

"It is surprising, given the consequences, that regulatory impact assessments were not conducted prior to the introduction of these laws," Pike said.

Decline slowing

According to the Adcorp Employment Index, the rate of employment fell to a marginal annualised rate of 0.26% in June after a steep fall of 6.2% the previous month.

Employment continued to fall once again though in the highly cyclical construction (6.61%) and wholesale and retail trade (5.38%) sectors.
   
This was offset by employment growth in finance (4.65%) and community services, including government (3.21%).

A strong showing was also recorded among sales and service workers, where employment increased by 3.25%, and of clerks by 2.19%.

 - Sapa