South Africa’s sad state of declining job security: 2008 to 2016

Job and wage security remained weak in the second quarter of 2016 – caught up in a labour environment of declining job and wage security that has lasted for almost six years since 2011.

This is according to the quarterly Solidarity ETM Labour Market Index (LMI), compiled by the trade union Solidarity and ETM Analytics, released on Monday (22 August).

The LMI is an index of employee confidence, labour affordability and the ETM Business Cycle Index. In terms of the index, 50 is the break-even level between rising and falling job and wage security.

According to the union’s data, the index has increased marginally from an upwardly revised 41.2 in Q1 2016 to 42.1 in the second quarter of 2016, indicating continued difficult labour conditions in South Africa.

“Although there is some indication that the affordability of labour may have reached a turning point in the cycle, which could bring relief to employees, such a turnaround could only be confirmed in subsequent quarters,” said Gerhard van Onselen, economic researcher at the Solidarity Research Institute (SRI).

Index

The following graphs show how the first quarter of 2016 showed the worst rates of unemployment – across both definitions – since 2008, while GDP growth slowed to some of the worst levels in years.

“Although the LMI rose slightly in Q2 2016, it remains within a 6-year downward trend and well below the 50.0 threshold, indicating rapidly rising job and wage insecurity”, the report said.

“This trend is confirmed by official Stats SA employment reports for Q1 and Q2 2016. Both showed a deterioration in hiring conditions, as employment declined in a majority of industries over the period.”

Retail employment trends were particularly worrying, the union said, and served as a warning signal of broader macroeconomic slowdown.

Unemployment rates (Q1)

Unemployment

Job absorption rates

Absorption rates

GDP growth

GDP growth

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