Mathabo Le Roux
25 March 2009
Johannesburg — QUARTERLY employment statistics released by Statistics SA (Stats SA) yesterday confirmed the pain in the manufacturing and mining sectors, which shed 20000 and 11000 jobs respectively in the fourth quarter as demand for commodities and manufactured goods slumped on the back of the global economic crisis.
The survey reflected first-quarter employment levels in the manufacturing sector that were comparable to the 1998 Asian crisis. However, a 67% reduction in average work hours per factory worker reported by manufacturers was at levels last seen in 1970, Standard Bank said.
Stats SA's quarter-on-quarter growth rate in employment in the formal non-agricultural sector slowed to 0,3% in the fourth quarter of last year, down from growth of 0,8% in the previous year.
According to the survey, an estimated 8,513-million people were employed in the formal sector, which represents an annual increase of 1,2%, or 103000 workers, compared to December 2007.
The figures present a more tempered picture than the recent Quarterly Labour Force Survey.
But while the latest data reflected a net gain in employment with only two sectors in distress, economists warn that job losses will become more widespread this year and next as SA slips into recession.
SA's economy shrank 1,8% in the fourth quarter of last year, its first contraction in more than a decade and its sharpest since 1992, when it was last in recession.
Unemployment is typically a lagging indicator of economic conditions as employers balk at the cost of retrenchment and rehiring workers when the downtrend turns.
Standard Bank economist Danelee van Dyk said the economy was likely to continue shedding jobs long after the recession ended.
According to Standard Bank, current data reflect a 12-month lag between the previous economic slowdown in the third quarter of 2001 and the peak in unemployment of 26,6%. Unemployment is therefore expected to increase until the fourth quarter of this year.
While the marginal increase in formal sector jobs in the fourth quarter will help to buffer household spending in the short term, job losses of more than 400000 are likely over the following year if the global slump deepens, Van Dyk said in a research note.
Standard Bank expects the manufacturing and financial intermediary sectors -- which account for 38% of formal employment -- to be among the worst hit sectors in the current global recession. Further job losses are also expected in the mining sector as commodity prices continue to drop.
The effect of job losses in these key sectors is expected to significantly curtail household spending, which would have a ripple effect on income-sensitive consumer goods sectors, such as cars and housing.
Standard Bank projects a likely scenario of a cumulative contraction of the mining and manufacturing workforce of 8% and 10% respectively, which could see gross earnings in the formal sector decline by as much as 7%.
lerouxm@bdfm.co.za
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