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Johannesburg - The South African economy shed 118 397 jobs in February, marking the biggest monthly loss in almost three years, according to the latest Adcorp Employment Index.
The biggest losses were recorded in permanent work, which lost 104 593 jobs. Temporary work lost 26 832 jobs, according to Adcorp labour economist Loane Sharp.
From a sector perspective, the impact was diverse. All economic sectors shed jobs during the month.
Significant job losses were observed in mining (-60.5%), transport and logistics including communications (-21.7%) as well as wholesale and retail trade (-6.9%).
All occupations shed jobs during the month, mostly among trades workers (-15.1%) and clerks and other service workers (-8.7%).
The only sector to create employment was the informal sector, numbering 13 028 jobs for the month.
Employment tax incentive
While the current figures paint a discouraging picture, Sharp is optimistic about South Africa’s newly launched employment tax incentive and its ability to have a sustained positive impact in the labour market.
This impact will be initially felt by the burgeoning low-skilled, low-paid youth, with the potential for a more widespread impact on other employment groups in years to come.
“The defining characteristic of the employment tax incentive is that it is the first policy measure that seeks to stimulate the demand for labour,” said Sharp.
In his view the incentive is defined by its strategic focus, emphasis on the creation of demand for jobs, side-stepping opposition from Cosatu, profit motive, hypothesis of linkages between employment and wage costs and focus on the formal sector.
“For the above reasons, the employment tax incentive represents a great leap forward in the government’s thinking about South Africa’s unemployment problem," said Sharp.
He said it is targeted at the right group, namely unemployed youth between the ages of 18 and 29.
"It is the first governmental initiative to directly stimulate the demand for labour," said Sharp.
"It has been introduced despite fierce opposition from Cosatu. Its underlying mechanism is the profit motive. Inadvertently, it is a decisive test of the link between wages and employment. And perhaps by design, it is intended only for formal business enterprises.”
Although the incentive will initially be limited to low-skilled, low-paid youth, the government has indicated that the success of the programme will determine whether it will be extended beyond its current 31 December 2015 deadline.
“It is difficult to imagine a better designed programme for South Africa’s unique conditions," said Sharp.
Based on Adcorp's own modelling of the sensitivity of employment to wage costs, it seems likely that the youth tax incentive will create 852 000 jobs over the coming decade.
That is assuming that the incentive remains in place beyond its current anticipated deadline of December 31 2015, said Sharp.
The biggest losses were recorded in permanent work, which lost 104 593 jobs. Temporary work lost 26 832 jobs, according to Adcorp labour economist Loane Sharp.
From a sector perspective, the impact was diverse. All economic sectors shed jobs during the month.
Significant job losses were observed in mining (-60.5%), transport and logistics including communications (-21.7%) as well as wholesale and retail trade (-6.9%).
All occupations shed jobs during the month, mostly among trades workers (-15.1%) and clerks and other service workers (-8.7%).
The only sector to create employment was the informal sector, numbering 13 028 jobs for the month.
Employment tax incentive
While the current figures paint a discouraging picture, Sharp is optimistic about South Africa’s newly launched employment tax incentive and its ability to have a sustained positive impact in the labour market.
This impact will be initially felt by the burgeoning low-skilled, low-paid youth, with the potential for a more widespread impact on other employment groups in years to come.
“The defining characteristic of the employment tax incentive is that it is the first policy measure that seeks to stimulate the demand for labour,” said Sharp.
In his view the incentive is defined by its strategic focus, emphasis on the creation of demand for jobs, side-stepping opposition from Cosatu, profit motive, hypothesis of linkages between employment and wage costs and focus on the formal sector.
“For the above reasons, the employment tax incentive represents a great leap forward in the government’s thinking about South Africa’s unemployment problem," said Sharp.
He said it is targeted at the right group, namely unemployed youth between the ages of 18 and 29.
"It is the first governmental initiative to directly stimulate the demand for labour," said Sharp.
"It has been introduced despite fierce opposition from Cosatu. Its underlying mechanism is the profit motive. Inadvertently, it is a decisive test of the link between wages and employment. And perhaps by design, it is intended only for formal business enterprises.”
Although the incentive will initially be limited to low-skilled, low-paid youth, the government has indicated that the success of the programme will determine whether it will be extended beyond its current 31 December 2015 deadline.
“It is difficult to imagine a better designed programme for South Africa’s unique conditions," said Sharp.
Based on Adcorp's own modelling of the sensitivity of employment to wage costs, it seems likely that the youth tax incentive will create 852 000 jobs over the coming decade.
That is assuming that the incentive remains in place beyond its current anticipated deadline of December 31 2015, said Sharp.
