The Steel and Engineering Industries Federation of Southern Africa (Seifsa) said on Tuesday that South Africa’s employment statistics showed signs of a “deeply troubled economy” and was a serious cause for concern.
This comes after Statistics South Africa released its Quarterly Employment Statistics showing that employment decreased by 31,000 quarter-on-quarter, from 9,620,000 in June 2017 to 9,589,000 in September.
This means that 31,000 jobs in total were lost between the second quarter and the third quarter of 2017, amounting to a 0.3 percent decrease. StatsSA said this was largely due to decreases in the community services, manufacturing, mining, electricity, trade, and business services.
Seifsa chief economist, Michael Ade, said the StatsSA data showed that the manufacturing sector, of which the metals and engineering sector is part, lost 0.4 percent of total employment, or at least 5,000 jobs in the third quarter of 2017.
Ade said that the data confirmed a direct negative correlation between employment numbers and manufacturing production, as companies chose to utilize existing excess capacity and more capital in productive processes.
He attributed the decreased employment in the manufacturing sector largely to volatile output and structural challenges inhibiting industries from benefiting from improving global demand and employing more labour. He said this was compounded by both frictional and seasonal unemployment dynamics.
“Of specific concern is that, despite the positive contribution made by the manufacturing sector towards an improvement in real GDP growth, which contributed 4.3 percent in quarter three of 2017, the benefits did not translate to an increase in employment,” Ade said.
“These are worrying numbers, given the existing trade-off between employment and economic growth. This highlights the need for multiple approaches to the unemployment problems facing South Africa. Employment levels are generally supposed to increase or decrease on the back of higher or lower economic activity, and the current employment numbers do not paint an encouraging picture,” said Dr Ade.
Ade said that the decrease in employment for this period highlights subdued domestic demand conditions and structural challenges faced by most industrial sectors.