SA labour market at worst levels since global economic crisis: index

 ·12 May 2016
SA unemployment

The latest South African Labour Market Index for Q1 2016 by union Solidarity shows that the local labour market has declined in every key metric.

The Solidarity LMI, compiled in collaboration with ETM Analytics, is based on employee confidence, labour affordability and the ETM business cycle metrics over the past quarter.

The index dropped sharply from a downwardly revised score of 44.6 in Q4 2015 to 38.6 in the first quarter of 2016 – a new low since the 2008/2009 financial crisis.

In terms of the LMI, 50 is the break-even level between rising and falling job and wage security.

Indicator Q1 2015 Q4 2015 Q1 2016 Weight
Employee Confidence 37.5 48.8 36.5 33.3%
Labour Affordability 39.7 37.5 33.6 33.3%
Business Cycle 54.5 47.4 45.7 33.3%
LMI 43.9 44.6 38.6 100.0%


According to Gerhard van Onselen, economic researcher at the Solidarity Research Institute (SRI), the decline in the index is an indication of a deteriorating labour environment with slow wage growth, weak net employment and retrenchments in most sectors.

Solidarity has attributed the lower levels of job and wage security in the first quarter of 2016 to: the sharp depreciation of the rand from December to February; the looming threat of a credit rating downgrade; and major political scandals within the context of weak growth, rising costs and overall uncertainty in the business sector. Solidarity LMI

“Given the weakening of the index, the latest weak labour market figures released by Statistics South Africa this week did not come as a surprise,” Van Onselen said.

Earlier this week, Stats SA announced that South Africa’s unemployment rate rose significantly, by 2.2 percentage points, to 26.7% in the first quarter of 2016.

Over 355,000 jobs were lost in the quarter, with over 500,000 new unemployed people entering into the job market.

The expanded unemployment rate which includes those who were available to work but did not look for work in the reference period also increased by 2.5 percentage points between Q4: 2015 and Q1: 2016 to 36.3%, StatsSA said.

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