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Job, wage security continue to decline - index

Cape Town - Job and wage security continue to decline, according to the latest Solidarity-ETM Labour Market Index (LMI) released on Wednesday.

The decline is, however, at a less alarming rate than in early 2016, according to Solidarity.

The trade union sees the LMI as a measure of job and wage security in the SA labour market, where 50 represents the break-even level between rising and falling security.

The LMI increased from 45.3 in the first quarter of 2017 to 46.7 in the second quarter. Although this is the fifth consecutive quarter of increase, it is concerning to Solidarity that the index remains below 50.0.

Gerhard van Onselen, a researcher at the Solidarity Research Institute (SRI), argues that labour market conditions remain stagnant and stifled, but not as bleak as in the second quarter of 2016.

“Despite improving somewhat from a revised low base in the first quarter of 2017, labour affordability, one of the index’s subcomponents, remains a significant concern, said Van Onselen.

"Given the stagnating economic conditions, employers have little incentive to expand their expenditure on labour.”

READ: Compulsory social security fund on the cards

While the Business Cycle Index is pointing toward marginal improvements in the SA economic conditions in the third and fourth quarters of 2017, it is uncertain, in his view, how easily and strongly this trend will be sustained.

"Just as is the case with various other macro-economic indicators, the index overall remains sluggish, pointing towards a broader trend of economic stagnation,” said Van Onselen.

“Labour market conditions at present appear to be severely affected by political uncertainty and poor policy decisions. A policy environment hostile to free enterprise and the possibility of future political shocks are probably keeping a lid on local investments and expansion.”

In his view, political uncertainty in general and the ANC National Conference in particular are likely to have an impact on the index in the coming quarters.

"Presently the government lacks the will to commence with much needed deregulation and policy reform to remedy the problem. In fact, policies such as the latest Mining Charter seem to be exacerbating this underlying trend of stagnation,” said Van Onselen.

(Supplied)

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