The truth about South Africa’s “jobs bloodbath”

Labour market economist Dr Neva Makgetla says that data from Stats SA showing the country lost 355,000 jobs in the first quarter of 2016 is likely exaggerated.

Earlier this month, Stats SA published it Quarterly Labour Force Survey for Q1 2016, showing a massive jump in the country’s unemployment rate – from 24.5% in Q4 2015, to 26.7% in 2016.

Contributing to this big jump was the loss of 355,000 jobs between the quarters.

According to a report put out by Makgetla this week, however, there is some doubt whether so many jobs were actually lost, as it is unlikely that this kind of ‘jobs bloodbath’ could have occurred without significantly more impact on communities and workers.

“So what is really going on? The short answer is that we can’t tell (how many jobs were really lost) because of statistical problems,” the economist said.

According to Makgetla, for its latest Quarterly Labour report, Stats SA shifted to a new master sample, which would have skewed the data.

“It’s likely that the reported jobs crash reflects a more realistic estimate of employment levels following four quarters of exaggerated figures (from the previous sample),” she said.

“Statistics South Africa reported in the QLFS documentation that, in the first quarter of 2015, it changed the master sample to reflect findings from the 2011 Census. That is, it essentially re-weighted its sample, which covers around 30,000 households every quarter.”

“It seems likely that the uptick in employment figures for 2015 resulted from this shift, rather than from unusually rapid job creation. It is not clear whether some further modification in the sampling frame led to the correction in the first quarter of 2016.”

According to Makgetla, the trends reported for mining and agriculture employment in 2015 were particularly striking and also added weight to her view.

For both sectors, the QLFS found substantial jobs growth in 2015 despite the end of the commodity boom and the drought.

Moreover, in the first quarter of 2015, with the introduction of the new master sample in 2015, the QLFS found that agricultural employment increased from 740,000 to 890,000 – some 20% growth in a single quarter.

“While it is likely that employment creation has been affected by the broader economic slowdown, the sharp job losses reported for the first quarter of 2016 seem highly unlikely. Rather, they seem to have resulted largely from the shift to a new sampling frame,” the economist said.

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