Slowdown in economic activity causes fall in non-farm jobs in second quarter

The slowdown in economic activity in South Africa caused a fall in non-farm jobs in the second quarter with the economy shedding 119 000 jobs on a quarterly basis. A total of 9.948 million people were employed in the second quarter.

Economic research group Oxford Economics Africa says the most recent decline in non-farm jobs was to be expected following the slump in the real gross domestic product (GDP) in the second quarter.

“Employment remains structurally low, with fewer people employed prior to the pandemic and the recovery has been gradual. The recent growth spurt in part-time employment reflects the uncertain economic climate where businesses seem unable or reluctant to hire employees on a full-time basis.”

Economic stagnation and policy paralysis are impeding the creation of sufficient employment opportunities to absorb new entrants into the labour market and contribute to continued high levels of unemployment and income inequality, the group says.

ALSO READ: SA’s 0.7% GDP decline means possible job, wage cuts on horizon

The reasons for fewer jobs

“Dull economic prospects, the persistence of large skills shortages and a lack of employment-stimulating policies, suggest the outlook for employment in South Africa is very bleak over the medium term.”

Oxford Economics Africa says in addition, high living costs and tighter monetary policy will squeeze households in the near term, while recent intense load shedding does not bode well for GDP growth in the third quarter.

According to Statistics SA’s quarterly employment data (QES), total gross earnings increased by R474 million compared to the first quarter to R787.3 billion. There were revisions from the first quarter figures, with the department of mineral resources and energy (DMRE) unable to provide detailed employment and earnings data for workers employed in mining and quarrying.

Part-time employment declined by 8.4% compared to the first quarter to reach 1.122 million in the second quarter, but it was an increase of 15.9% compared to last year. Full-time employment declined on an annual and quarterly basis to reach 8.826 million in June 2022.

Full-time employment refers to people who work 40 hours or more a week and part-time employees work less than 40 hours.

ALSO READ: Latest jobs report brings some good news, but unemployment still sky high

The group says the latest data shows that the level of employment dropped in the second quarter, while earnings growth remained mostly flat. The total number of formal, non-agricultural employed individuals declined by 119 000 during the quarter to reach 9.948 million.

However, this is 74 000 higher than the number of people employed last year at the end of the second quarter. The second quarter’s fall was largely due to decreases in the community services (-100,000), business services (-15,000), construction (-13,000), manufacturing (-12,000) and electricity (-1,000) industries, counterweighed by increases in trade (+17,000), mining (+4,000) and transport (+1,000) employment.

ALSO READ: Ramaphosa: Million more people employed reason for ‘cautious hope’

This is how much people earn

The average monthly earnings paid to employees in the formal non-agricultural sector increased by 3.7% compared to the first quarter to R24,578 and by 4.0% compared to last year.

Total gross earnings paid to employees came in at R787.3 billion, slightly higher than the downwardly revised R786.8 billion recorded in the previous quarter, mostly due to increases observed in the transport, community services, trade, construction and mining subsectors, whereas decreases were noted for business services, manufacturing, and electricity.

It must be noted that the QES data indicates the number of people receiving salaries and not employment/unemployment trends, which are covered by the Quarterly Labour Force Survey (QLFS), a survey of households that collects data on the labour activities of individuals. The QES is an enterprise-based survey which collects data from non-agricultural businesses and organisations in the formal economy.

According to the QLFS for the second quarter of the year, the country’s unemployment rate decreased for the second consecutive quarter although it was marginal by 0.6 of a percentage point from 34.5% in the first quarter to 33.9% in the second quarter.