South Africa’s labour market is improving – but there’s nothing to cheer about
The latest Labour Market Index compiled by union Solidarity shows that things are improving slightly for workers in the country – but the group warns that it is far too soon to start celebrating.
The Solidarity LMI is compiled in collaboration with ETM Analytics, and is based on employee confidence, labour affordability and the ETM business cycle metrics over the past quarter.
In the previous index report, South Africa had slipped to its worst levels since global economic crisis in 2009/09, with an LMI score at 41.9. Now in the third quarter of 2016, the LMI score has improved to 42.5 (Q3 2015: 42.3).
In terms of the LMI, 50 is the break-even level between rising and falling job and wage security- so any score under 50 is still not good for the country.
According to Gerhard van Onselen, an economic researcher at the Solidarity Research Institute, the overall LMI still paints a bleak picture for labour.
“Unfortunately, macro-economic indicators, such as motor vehicle sales, household credit measurements, and surveys on business demand conditions are concerning and are suggesting that any talks of ‘green shoots’ of economic recovery may be premature,” Van Onselen said.
“Much has to happen to get labour conditions out of the present slump. First and foremost, pro-market reforms, with a removal of regulatory hurdles and costly ‘red-tape’ as well as political meddling in the economy, are needed for an appropriate channelling of resources and renewed investment in the economy,” the researcher said.
According to the latest employment statistics released by Stats SA (Quarterly Employmenr Statistics to June 2016), 67,000 South Africans lost their job between the first and second quarter of the year, following the loss of 3,000 jobs between Q4 2015 and Q1 2016.
Year-on-year, however, the employment stats showed a net gain of 30,000 jobs. While the figure is more positive, it is far away from the necessary job creation needed to drag South Africa out of its economic slump.
Read: The solution to South Africa’s unemployment problem: pay people less
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