Job creation sluggish: Quarterly Bulletin

Tuesday, March 22, 2011

Pretoria - South Africa's job creation remained sluggish, despite the recovery in the country's economic activity, the Quarterly Bulletin said on Tuesday.

According to the Reserve Bank's March Quarterly Bulletin, the pace of job creation in the past 18 months has been sluggish, with formal non-agricultural employment increasing moderately in the third quarter of 2010. 

In the private sector, employment levels remained roughly unchanged in the third quarter while employment levels in public sector continued to increase although at a slower pace than in the second quarter.

In the third quarter, formal non-agricultural employment recorded a seasonally adjusted and annualised increase of 0.2 percent, adding 4 800 jobs to the economy.

Job creation in the private sector inched lower, decreasing by about 300 in the third quarter, while the public sector created approximately 5 100 jobs particularly at provincial level.

In the construction sector, job losses continued in the third quarter contracting at an annualised 4.6 percent. This, according to the bulletin, was consistent with the usual behavior of this sector, which has a tendency of lagging the business cycle and the completion of several construction projects for the FIFA World Cup tournament.

Following an uptake in manufacturing employment in the first quarter of 2010, employment levels resumed their downward trend in the second and third quarters of the year, recording rates of decline of 6.3 and 3.6 percent respectively.

"Labour paring was partly related to structural changes in the economy favouring higher levels of productivity in the face of fierce international competition. Stronger growth in manufacturing output would apparently be required for the sector to act as a conduit for accelerated employment creation," said the bulletin.

Employment growth in the non-gold mining sector accelerated robustly in the past year, from a seasonally adjusted and annualised rate of 5.1 percent in the fourth quarter of 2009 to 8.4 percent in the third quarter of 2010. Mining activity benefited from increased global demand for commodities.

The electricity supply sector contributed to a steady increase in job creation with 2 300 jobs being added in the second and third quarters of 2010.

Employment levels in the trade, catering and accommodation services sector increased at an annualised rate of 4.6 percent, with roughly 18 500 jobs being created in the third quarter of 2010, following virtually no employment gains in the preceding quarter.

More than half of the private-sector job losses between the third quarter of 2008 and the first quarter of 2010 occurred in the finance, insurance, real estate and business services sector and the manufacturing sector. 

"The share of the private sector in total employment shrank in the past two years, whereas the public sector claimed the residual increase as its staff complement rose, especially at the provincial level. The public sector raised its share in total employment from 21.6 percent to 23.6 percent over the period," noted the bulletin.

"For job creation to be sustained in the South African economy, the private sector is expected to play a key role. In the past, the finance, insurance, real estate and business services, construction, non-gold mining and trade, catering and accommodation services sectors accounted for the bulk of employment gains during extended upward phases of the employment cycle."