LABOUR: Job Growth, But Little Desire To Work
Recent Western Cape Business News
A total of 103 327 new jobs were created in December 2011 – the fastest rate of growth in nine months, according to the Adcorp Employment Index, released yesterday.
Loane Sharp, labour market analyst at the human capital management group, Adcorp, says that all employment categories reported growth in December, the fastest being temporary work (15,1%) and permanent jobs (6,2%). Agency work lagged behind with a growth rate of 4,8%, “possibly reflecting regulative and regulatory uncertainties regarding labour broking”.
In spite of the improved statistics, Sharp points out that the number of jobs in South Africa is still 850 000 below the peak reached before the 2009 recession, since which time the economy has shed 1,56 million permanent jobs and created 0,71 million temporary jobs.
The Adcorp Index found that significant job growth was recorded in the distribution and logistics sector (15,6%) and the financial services (8,9%) and retail (7,9%) sectors. No sectors reported a decline in employment.
Job growth was fastest in the low-skilled and semi-skilled job categories, notably services workers (10,7%), clerks (9,8%) and elementary occupations (8,2%).
“This is the first time since the 2009 recession that employment growth has been observed in the entry-level occupations,” says Sharp.
In an analysis appended to the monthly Adcorp Employment Index, Adcorp finds that government handouts, trade unions and affirmative action have combined to generate a “marked negative effect” on the desire to work in South Africa.
Says Sharp: “As many as 10,2 million South Africans – one in five – receive grants of one form or another, amounting to 14,9 million grants or 1,5 grants per recipient, yielding average annual transfers of R9 539 per beneficiary.”
This latest report also draws attention to Statistics SA’s Quarterly Labour Force Survey as providing “startling confirmation” of these effects.
Says Sharp: “43,3% of unemployed people are willing to accept a job, if offered, when they are supported by their own savings, whereas 11,1% of people will accept a job if they are supported by social grants and welfare.
“Unemployed people are also more likely to remain out of work if they are supported by social grants and welfare: the average duration of unemployment is 16 months for people who do not receive grants, compared to 21 months for people who do.”
This month’s Index also demonstrates how unions typically discourage work by increasing their members’ demand for leisure time and sociable working hours (since the desire for leisure rises with income).
“Only 9,3% of unionised workers, as opposed to 17,8% of non-unionised workers, are prepared to work additional hours in a given week. And, of those who will do so, unionised workers are prepared to work an additional 0,9 hours a week compared to 2,4 hours a week for non-unionised workers.”
The Adcorp Employment Index for December 2011 emphasises that affirmative action “has exceedingly poor consequences” for the desire to work in South Africa, with highly qualified whites “substantially less likely” than blacks to find a job within 12 months of initiating a job search. For job-seekers with a tertiary qualification, blacks are 34% more likely to find work than whites.
“This has contributed to the higher percentage of whites operating their own businesses,” says Sharp. “Business owners’ share of national income increased from 39,9% in 1995 to 47,2% in 2011, while employees’ share has correspondingly declined.”
Meanwhile, Sharp also notes that the university system has failed to produce graduates in business-oriented fields.
“There are currently nearly 600 000 unemployed university graduates in South Africa, mostly in the arts, humanities and social sciences, whereas the private sector has more than 800 000 vacancies in management, engineering, law, finance, accounting and medicine.”
Certain Professional bodies also restrict entry into the professions, often acting in concert with universities and, typically, with legislative and regulatory quiescence.
For example, the General Council of the Bar, the law societies, the Health Professions Council, the Institute of Chartered Accountants and other bodies that set their own criteria – typically an exam, but often other criteria such as low-paid articleship or housemanship – as a prerequisite for entry into the professions.
By contrast, fields such as physics, finance, engineering, economics and management do not have professional bodies.
Sharp outlines the key results of this trend:
many South African professionals enjoy living standards above those of their peers, at the expense of a shortage of these skills for the country as a whole;
tens of thousands of people with suitable capabilities who are willing to work in the professions are artificially excluded from doing so, and are forced to enter second-choice careers earning less than their aptitude and qualifications justify; and
these individuals seek the possibility of training and/or working abroad, and in this way professional bodies are unwittingly responsible for the emigration of many high-skilled and talented young people.
The Department of Home Affairs no longer compiles proper statistics on emigration, so Adcorp finds it difficult to know how substantial this effect is.
In short, Adcorp concludes, there are countless disincentives to work in South Africa.
“Any review of labour market laws and regulations should incorporate not only employers’ incentives to hire workers, but also people’s incentives to work.”
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