Western Cape Business News

Send  Share  RSS  Twitter  06 Dec 2012

LABOUR: Employment Picks Up


Recent Western Cape Business News

Employment in South Africa increased sharply in November, having grown at an impressive annualised rate of 4,4%.

The Adcorp November Employment Index, says that during September, October and November the economy added 112 473 jobs – 70 502 in November alone – reversing the decline of 82 431 jobs in the four months to August.

Adcorp, the human capital management group, found that jobs growth occurred in all sectors, but temporary work continued to outperform the other categories, growing at a rate of 13,2% or 43 344 jobs during the month.

Strong growth of 7,4% was achieved in agency work; growth that Adcorp considers will likely continue as the economy ramps up for the year-end retail season.

November saw the unofficial sector – the part of the economy that is not captured by official statistics – grow robustly, creating 25 161 jobs during November for an annualised rate of 4,7%.

The primary and secondary sectors – mining and manufacturing – continued to shed jobs, losing 31 000 between them during the month. The tertiary sectors – mostly services – gained 40 000 jobs during the month, with a quarter having been created in the government sector.

The strongest employment growth – 14,9% – was in transport, followed by wholesale and retail trade (10,3%) and construction (7,0%).

The November Employment Index takes an in-depth look at the effect of South Africa’s labour laws on employment.

The results are unfavourable: minimum wages in agriculture and mining, together with dismissal protections throughout the economy, have caused 1,5 million job losses across various sectors since 2001. The current round of tightening of labour laws will exacerbate this trend.”


  • agricultural employment – even making allowances for the mix-up in Statistics SA’s estimates – has fallen from 2,5 million to 647 000 since 2001; and

  • mining employment has fallen from a peak of 1,4 million in the mid-1980s to just 357,000 today.

The staggering job losses in agriculture and mining are closely connected to minimum wages introduced in these sectors in the mid-1990s. The sectors with the highest job losses – agriculture, mining and domestic work – were adversely affected by minimum wage laws which raised wages above their market-related levels.

The introduction of the Labour Relations Act in 1995 induced a sharp rise in wages, due to collective bargaining laws that allowed wages to rise sharply above productivity-related levels, and to trade union recognition laws that heavily favoured unionisation.”

Adcorp suggests that in the years ahead the economy will come to depend much more significantly on the financial services and wholesale and retail trade job-creating sectors.

But the problem remains of South Africa’s poor secondary and tertiary education system, which does not afford workers opportunities to re-skill themselves to be absorbed by the job-creating sectors.”

Adcorp finds it difficult to foresee, in particular, how the 2,03 million low-skilled agricultural and mining workers who lost their jobs over the past decade could possibly be made to fill the 2,04 million job vacancies for high-skilled people that opened up in financial services and wholesale and retail trade over the same period.

The only sector that hasn’t been adversely affected by rising wage levels is the government sector, which now employs 2,8 million people – or one in every five workers – and which accounts for 86% of all the jobs created over the past decade.

Excluding government, employment was roughly flat over the period – at around 12,4 million – even though the economy’ production capacity grew in real terms from R1,3 trillion to R2,0 trillion and the country’s population grew from 43,3 million to 51,7 million.

Adcorp emphasises that in spite of a significant 19,4% growth in population and a 54% expansion in economic activity over the past decade, the labour market has not been able to offer employment to any additional people outside of government.

In total, government patronage now supports 21,8 million people – indirectly, through 2,8 million government workers and, directly, through 19 million grant recipients. Employee-related expenses now account for 88,2% of government final expenditure.”

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