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SA on brink of jobs recession

Sep 10 2012 11:39 Sapa

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Johannesburg - South Africa faces a real prospect of a jobs recession, recruitment group Adcorp said on Monday, as employment numbers fell for the third month.

"Most of the job losses during August were in the formal sector, which shed 14 382 jobs," Adcorp said in a statement.

"Permanent employment fell by 7 688 during the month, whereas agency employment increased by 1 083."

According to the Adcorp Employment Index, employment fell at an annualised rate of 0.23%, following sharp declines of 3.1% in May, 2% in June, and stalled employment numbers in July.

After three months of falling employment, a jobs recession was a real prospect.

This occurs when there are six consecutive months of employment declines.

There was a trend towards the use of agency temps, and away from in-house temps as part of labour risk outsourcing.

Trade, transport, finance and community services - the services sectors - gained 14 000 jobs.

But the primary and secondary sectors, including mining, manufacturing and construction, shed 16 000 jobs.

Adcorp's index of informal sector employment rose by 2%.

This was the 14th consecutive monthly rise.

South Africa's labour law environment was ranked 143 out of 144 countries by the World Economic Forum's Global Competitiveness Report. Previously, South Africa was ranked 133rd.

It was the worst country for labour-employer conflict, second worst for hiring and firing practices, and fifth-worst for wage flexibility.

Restrictions on the use of temporary workers was the most problematic of the proposed additions to labour laws and regulations, said Adcorp economist Loane Sharp.

These workers could only sue the temp agency - their employer - at present. If the proposed amendments were passed, both the employer and the client - the company for whom the work was performed - would be liable, he said.

Although the intention was to give temps the same rights to legal recourse as other workers, clever commercial contracting would scupper this.

The provision that work of equal value would receive equal pay was also problematic.

The intention was that temps should receive the same remuneration and benefits as permanent workers.

"The unintended consequence will be that remuneration and benefits of all workers will be reduced to the lowest common denominator, so that benefits such as medical aids and pension funds will become more, not less, scarce," he said.

"This ‘race to the bottom' will be fuelled by the prospect of severe penalties for non-compliance, ranging from 2% of company turnover for a first offence to 10% of turnover for repeat offences."

A further amendment would require employers to provide financial security in order to review labour decisions.

This would prevent employers' access to justice.

"South Africa's labour laws favour older, less skilled, unionised workers at the expense of young and inexperienced job-seekers," he said.

"The unintended consequence of all this will be an acceleration of employers' plans to introduce mechanisation and automation in the form of capital equipment and technology, reducing the economy's labour intensity and creating additional unemployment."

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