South Africa’s labour market is getting worse

Job security in South Africa fell in the last year, driven down by a sharp drop in the employee confidence index, Solidarity’s labour market report showed on Tuesday.

The Solidarity-ETM South African Labour Market Index fell to 43.5 in the first quarter (Q1) of 2015, from 44.6 in the last quarter (Q4) of 2014. The measure of job and wage security set 50 as the break-even between rising and falling job security.

The index “indicates that we are still in the unfavourable labour market environment that we have grown accustomed to since 2011”, said Solidarity Research Institute head Piet le Roux.

“The Q1 reading is indicative of an environment of continued falling job security, where the degree of deterioration was larger than in Q4 2014, but somewhat better than the multi-year low of 40.9 achieved on the index in Q2 2014,” the report said.

“The index reflects conditions where there is slow or no real wage growth on aggregate, and where some sectors continue to see retrenchments.”

The report said anaemic employment conditions started in 2007, with a slight reprieve in 2010.

Solidarity’s Employee Confidence Index (EC) fell sharply on the quarter, reaching an all-time low of 30.7 in Q1 from 43.5 in Q4. “This was driven by a higher number of respondents reporting deteriorated levels of job security in the quarter, congruent with a rising level of layoffs in the mining sector as the likes of Anglo Platinum restructure business operations in the aim of staying solvent,” said the report.

The share of survey respondents reporting satisfactory job security fell to 46.5%, down sharply from 52.4% in Q4, while those reporting unsatisfactory job conditions climbed to 26.6% from just 16% in the prior survey.

It’s not all bad news, the report explains, as the Labour Affordability Index rose 6.5 points to 47.6 – it’s highest level in over a year – and the ETM Business Cycle Index rose by 2.8 points to 52.3.

“The move in the business cycle index is encouraging since that implies that macroeconomic conditions have improved somewhat,” the report said. “Moreover, labour affordability has not deteriorated as it did through much of 2014.

“Looking ahead, it remains questionable whether South Africa’s economy can continue to recover given a weak export environment, an ailing Eskom, and a volatile rand making it difficult to plan ahead.”


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South Africa’s labour market is getting worse