Statistics South Africa’s latest job growth figures, which showed a slower decline in the number of jobs lost in the formal sector, excluding the farming sector, is still uninspiring given the slow pace of economic growth, with key economic growth drivers losing ground.
When compared with the September period, jobs lost in the formal economy, excluding farming, declined 0.1% quarter-on-quarter when compared to the September period. Statistics South Africa said that the reason behind the flat figures in the three months to December was due to gains in sectors such as trade, business services, transport, and electricity.
However, the agency’s print noted that there were again declines in community services, as well as the key sectors of manufacturing, construction and mining. Year-on-year, job losses were more pronounced, with a 0.8% decline in formal employment.
Dr Azar Jammine, director and chief economist at Econometrix, says that manufacturing production, a key output driver for economic growth, has been on a decline for years, with production down 15% in the past decade as the economy deindustrialises.
Jammine adds that there is an urgent need for improved education to aid people join the manufacturing workforce to aid in driving economic growth. This, he says, is especially true in an age of artificial intelligence, which does have the potential to grow productivity and create jobs if people are sufficiently skilled.
Investec economist Lara Hodes says the fact that declines were logged in four of the eight industries included in the survey is “indicative of a lacklustre economy, which grew by a modest 0.6% in 2024”.
The second leg of the government and business partnership is targeted 3% economic growth this year and the creation of a million new jobs. Currently, 10.64 million South Africans are employed in the formal sector, excluding farming.
In the quarter to September last year, the figures for which were released in December, jobs declined by 1.2% quarter-on-quarter, although the yearly decline was more substantial, at 2.7%.
Statistics South Africa also noted that full-time employment dropped 0.1% quarter-on-quarter in the three months to December, and 0.3% year-on-year. Part-time employment, however, increased thanks to gains in trade, construction, and business services.
Hodes says that gross earnings paid to employees across all industry groups increased R59.1 billion or 6.1% quarter-on-quarter, with all sectors logging increases apart from mining, which saw gross earnings slide 1.8% in the period.
Seasonally adjusted mining production only increased by 1% in the third quarter of 2024 compared with the second quarter of 2024, Statistics South Africa figures show, the latest available.
Year-on-year, gross earnings increased by R35.5 billion or 3.6%. This is above the current inflation rate of 3.2%, although the cost of living has fluctuated during the period under review, having hit 5.6% last February.
Bonus paid to employees increased 85.4% quarter-on-quarter, mostly because of an increase in manufacturing, trade, community services, business services, construction, transport and electricity. Year-on-year, bonus payments increased by 3.2%, the data showed.
Jammine says that government has an imperative to push down its wage bill yet, with unions asking for bigger increases, this means less jobs.
Statistics South Africa’s print for the September quarter showed that the biggest decline in jobs was in what the agency terms community services, which Jammine says shows the balancing act government needs to do in terms of cutting expenses while negotiating wage increases.
The Public Service Coordinating Bargaining Council, in the first two months of the year, agreed with most unions on a 5.5% wage increase for this year, with future increases for the next two financial years being linked to inflation.
This comes as government debt is currently at 72.2% of gross domestic product, with expectations of it reaching 75.3% for last year, based on International Monetary Fund data.
In the previous quarter, the second biggest decline in jobs was in business services, followed by manufacturing, transport, and then mining. However, trade and construction reported gains, albeit small.
As Jammine notes, short-term job growth does not look positive.
“One has to actually see a concerted effort to try and turn these things around. I'm just hoping that with the government of national unity, once the teething problems are over, we may get more constructive policies.”
IOL