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Johannesburg - Hopes raised when the SA economy created jobs in the fourth quarter of last year were snuffed out with the release of Statistics SA’s Quarterly Labour Force Survey (QLFS) for the first quarter of 2010, which showed employment declined by 171000 between the fourth quarter of last year and the first quarter of this year.
Some economists were shocked by the figures, as they had expected another small increase in employment. However, the quarterly figures are volatile and difficult to predict.
The 1.3% fall in employment between the quarters resulted in the unemployment rate edging up 0.9 percentage points to 25.2% in the first quarter of 2010, from 24.3% in the final quarter of 2009.
In 2004, government set as a target the halving of the unemployment rate to about 14% by 2014. These latest job losses, and the huge numbers of jobs that would have to be found in future, suggests that that target is a pipe dream.
“It’s a bleak situation,” said Industrial Development Corporation economist Lumkile Monde. He said that the manufacturing sector was not creating jobs as it should, because it was being harmed by a strong rand.
“The export-orientated sectors are suffering,” he said.
Monde said that Trade and Industry Minister Rob Davies’s Industrial Policy Action Plan (IPAP) wasn’t the short-term answer to the economy’s massive unemployment problem.
“The problem is the cost of doing business in SA is too high. We’ve seen that with energy costs. There are also infrastructure backlogs that are pushing up costs. We need a lower cost structure for business before job creation will follow,” Monde said. He also emphasised rand strength as a problem.
Econometrix economist Azar Jammine said that he wasn’t as surprised by the employment drop as other economists might be, as seasonal factors had inflated fourth-quarter 2009 numbers.
More people work in retail and tourism over the Christmas holiday period, as well as in harvesting in the agriculture sector. At the same time, the first-quarter figures were influenced by school leavers, who swelled the number of the unemployed.
Jammine said it was unlikely that the figures would sway Reserve Bank governor Gill Marcus to cut interest rates, and he didn’t believe that further interest rate cuts would stimulate job creation.
Jammine said the SA economy was moving in a more skills and technology-based direction, which didn’t augur well for jobs for the millions of unskilled people in SA.
Choosing to return to more labour-intensive methods of production wasn’t really feasible if it didn’t make sense technologically. The key issue was to equip people with the skills that would enable them to become employable.
“Unfortunately, when it comes to skills and education, we have been moving backwards,” Jammine said.
The QLFS said that the number of people in the labour force decreased slightly by 25000 between the fourth and first quarters. The number of discouraged work-seekers increased by 153000, making them “not economically active” or not part of the labour force. (These are people who stop looking for a job, and one has to be actively looking for a job to be classified as unemployed.)
The number of unemployed people increased by 145000 between the fourth quarter of 2009 and the first quarter of 2010.
In the year between the first quarter of 2009 and the same period this year, there was an annual decrease of 6.1% (833000) in employment, an increase of 126000 in the number of unemployed persons and an increase of more than 1 million in the number of people who aren’t economically active – 624000 being discouraged work seekers.
- Fin24.com
