Western Cape Business News

Send  Share  RSS  Twitter  11 Jun 2012

LABOUR: Employment Numbers Nosedive


Recent Western Cape Business News

Employment in South Africa slumped by a steep annualised 3,1% in May, breaking a four month-long pattern of strong employment growth.

Adcorp, the JSE-listed human capital management group, found that all sectors, all occupations and all employment types suffered declines, with the sharpest declines having been recorded in:

  • transport (12,7%);

  • mining (12,0%);

  • agency work (9,1%);

  • domestic workers (8,4%); and

  • elementary workers (5,0%).

The Adcorp Employment Index identified the only bright spots as professional positions, where employment grew 4,9% and senior managers, up 2,2%.

Adcorp’s index of informal sector employment rose 1,2%, representing the 11th consecutive monthly improvement.

An in-depth Adcorp analysis of temporary employment in South Africa finds that the number of temporary jobs totals 3,93 million, or 30,2% of the national workforce.

Ironically,” observes Adcorp labour economist Loane Sharp, “current tightening of South African labour laws will have unintended consequence of expanding, rather than reducing, the role of temporary and agency workers in South Africa.”

He says that the most striking characteristic of the South Africa workforce over the past decade is its increasing temporary nature.

Indeed, since 2000, permanent employment has fallen from 11 million to 9,1 million workers – a decline of 1,9 million, or 18,7% of the workforce. Sharp points out that permanent employment has barely recovered from the global financial crisis.

For example, since the 2009 recession, permanent employment has increased by just 2%, whereas over the same period total employment – comprising permanent and temporary workers – has increased by 12,2%. In marked contrast, there are now 3,9 million temporary workers in South Africa accounting for 30,2% of total employment.”

Since 2000, the number of temporary workers has increased by 2,6 million workers or 187,5%, with the ratio of temporary to permanent workers having increased from 1 : 0.12 to 1 : 0.43 over the past decade.

Included in the temporary category is agency work (so-called “labour broker” workers), numbering 1 million – 25,5% of all temporary workers and 7,7% of the total national workforce.

Since 2000, temporary work has been growing at an annual average rate of 8,5%, permanent work at a negative annual rate of 1,3%, and agency work at a rate of 11,9% a year.

Sharp outlines the reasons for agency work growth as including:

  • globally there is a trend to outsource non-core activities, and management of production workers is increasingly being viewed as a non-core activity;

  • many a large number of companies face variable and unpredictable sales volumes, faced with which they need to add flexibility to their labour cost base by continuously re-matching business conditions with labour demand;

  • a large number of companies, especially in agriculture, retail trade, tourism and catering, face recurring cycles such as seasonality, implying no permanent need for workers;

  • many organisations, especially in construction, government infrastructure, mining, manufacturing, transport and logistics, have fixed-duration projects for which there is no permanent need for workers; and

  • modern businesses, particularly those in retail, wholesale, transport and logistics, communications, and manufacturing, no longer keep office hours, with the result that shift workers have become increasingly common.

Sharp emphasises that restrictive labour legislation has “undoubtedly” played a role in the rapid emergence of non-standard employment contracts, not only in South Africa but around the world.

He cites CIETT, the international private employment industry association, as having identified a strong positive correlation between the rigidity of local labour laws and the use of outsourced staff.

Ironically, the current round of tightening of South African labour laws – initially affecting only ‘labour brokers’, but now also affecting labour relations, basic conditions of employment, employment equity, and government-operated recruitment agencies – might have the unintended consequence of expanding, rather than reducing, the role of temporary and agency work in South Africa.”

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