Increase in new employment figures comes at a cost

The publication of the stubbornly high and increasing unemployment rate a week or two before the release of the quarterly employment statistics usually hides the good news that more and more people in South Africa actually do get jobs.

It’s true – the job market is growing, albeit at a slower rate than the increase in job seekers entering the market and struggling to find a job.

Maybe it is the bad news in the very high unemployment figure of nearly 30% that draws a lot of attention and commentary from all and sundry about what is wrong in SA.

While nobody can deny that the unemployment rate is high, and the nominal figures of unemployed persons and the number of needy households remain a huge concern, the real increase in employment and the statistics relevant to new employment opportunities are just as important to note.

Statistics South Africa publishes both sets of data. The Quarterly Labour Force Survey, which yields information on the number of persons seeking employment and the unemployment rate, surveys 30 000 households, while the Quarterly Employment Statistics survey is conducted among 20 000 registered businesses to collect information on employment in the formal sector and the level of wages and salaries.

Jobs and ‘proper jobs’

The employment survey thus excludes the informal sector and self-employed people in small businesses that are not registered for value-added tax. In short, the employment survey studies the trend in what unemployed people, politicians and community leaders would call “proper jobs” in public meetings and during protest marches.

The figures show that the number of proper jobs is growing, even during the current uncertain economic times. The first finding in the Stats SA report is that employment in the formal, non-agricultural sector increased by some 0.8% compared to a year ago.

Data shows that the formal economy employed 76 000 more people at the end of March 2019 than a year ago.

In the first quarter of 2019, the formal sector silently added 22 000 new jobs, while everybody was lamenting the bad state of the economy and how difficult it is to find a job.

The biggest increase in employment numbers was in the trading sector, which added 67 000 jobs compared to a year ago, increasing by 3.1%. This sector includes wholesale and retail trade, repairs to motor vehicles and to personal and household goods, as well as the hotel and restaurant industry.

The business services sector – including financial services, insurance, real estate and general business services – grew employment by 2.5% or 57 000 jobs over the last year. Mining, manufacturing and transport all added a few thousand jobs.

These healthy gains in employment were offset by big declines in two sectors, construction and personal services, which terminated another 63 000 jobs over the last year. The construction industry lost 23 000 jobs since March 2018. That represents a decline of 3.6% in a labour-intensive industry.

The trials and challenges of the construction industry are well known, especially with regards to big construction companies. Only this week, Group Five announced that more than 3 000 people will be left unemployed following the demise of most of the company’s businesses.

Snakes and ladders

Businesses in the community, social and personal services sector showed a decline of at least 40 000 employees, or some 1.5%, since a year ago. Luckily it showed recovery during the last quarter and chalked up gains of 19 000 jobs, or the total for the year would have been far worse.

Even the mining industry – usually only in the news when one or another mine announces retrenchments – added 5 000 new jobs during the last year net of all the big job losses in the industry.

The Stats SA survey shows that industries in the tertiary sector remain the biggest employers, employing more than eight million of the estimated 10.17 million workers in the formal economy. The manufacturing sector employs 1.3 million people and mines just less than 460 000.

Further analysis of the employment figures discloses some good news: job losses were mainly confined to part-time employees, while full time employment increased significantly.

Around 54 000 part-time jobs disappeared, but permanent employment increased by 130 000.

Part-time staff either upgraded to full-time employment, or companies are just a little more optimistic and are willing to take on permanent staff.

All sectors added full-time employment, with the glaring exception of the construction industry which shed both full-time and part-time jobs.

Remuneration

However, the improvement in employment numbers seems to have come at a cost. Stats SA’s research shows that earnings barely improved over the last year and lagged inflation by far.

Total gross earnings increased by only 3.7% since March 2018. The good news is that basic wages and salaries increased by 5.8% in line with the trend of offering proper jobs.

The bad news is that the tough economic conditions hit bonus and overtime earnings hard. These nice little extras declined by nearly 14% compared to a year ago.

Given the higher number of employees and small increase in total earnings, average monthly earnings would have increased by only 2.9% to R22 538 per month in March 2019 compared to R21 894 in March 2018.

The net increase of 76 000 jobs over the last year might not seem like much and pales in comparison to the number of unemployed still hoping to land a job, but it still is a significant number.

It is around 1 000 school buses full of workers making their way to work every morning and probably puts food on the table for nearly 200 000 people.

Figures in older Stats SA reports show that employment in the formal sector has increased by nearly a million people since March 2015. And when business and consumer confidence start to improve, the rate of creating new jobs will hopefully improve as well.

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