Unemployment jumps as unskilled workers enter market

SA’s unemployment rate rose unexpectedly to 25,2% in the first quarter of the year, driven by hefty job losses in the manufacturing and construction sectors, Statistics SA said yesterday.

But a large influx of new and largely unskilled entrants to the labour market was the main reason why unemployment rose so sharply, its latest Labour Force Survey showed.

The figures dashed hopes that economic growth would prompt a further dip in the jobless rate, which sank to a two-year low at 23,9% at the end of last year.

SA’s expanded unemployment rate, which includes people who have stopped looking for work, rose to 36,6% from 35,4% in the fourth quarter. That means nearly four in 10 South Africans who are seeking jobs are unemployed.

"The latest Labour Force Survey reading is very disappointing, suggesting that SA is still struggling to gain traction in the labour market," Stanlib economist Kevin Lings said yesterday.

SA’s jobless rate is well up from a low of 21,8% in the fourth quarter of 2008, ahead of a recession the following year, triggered by the global financial crisis.

The survey showed that the number of unemployed people rose by 282000 in the first quarter, partly due to seasonal factors, as temporary jobs are created at the end of the year.

But compared with the same quarter of last year, the number of unemployed climbed by 162000. This reflected a rise of 466000 in new entrants to the market.

Statistics SA said out of the 4,53-million people who were unemployed in the first quarter, about 60% did not have matric; about 68% had been looking for work for a year or longer; and 44% had never worked.

"We’re worried about this trend," Kefiloe Masiteng, Stats SA’s deputy director-general for general population and social statistics, said yesterday. "The education sector is not producing enough people who can be absorbed into the labour market. There is a high level of unskilled workers who can’t get jobs."

The construction industry shed 71000 jobs in the first quarter, suggesting that the government’s infrastructure spending programme has not yet had an effect on the labour market. Manufacturing lost 67000 jobs, which was puzzling after evidence that the economy’s second-biggest sector expanded in the first quarter.

Industry executives said the job shedding could be blamed in part on the effect Europe’s recession was having on demand for locally manufactured products. Europe is SA’s main trade partner, taking about a third of its manufactured exports.

"To a degree it’s not surprising as there was anecdotal evidence that companies were streamlining rather than increasing employment," said Coenraad Bezuidenhout, executive director of the Manufacturing Circle, an industry body. "We don’t expect huge job losses over the short term, but the outlook suggests there will be further loss of employment."

Surprisingly, the community and social services sector, which reflects public employment, had 11000 job losses. About 26000 jobs were created in the agricultural sector and 33000 in private households.

Employment fell by a net 75000. The formal, non-agricultural side of the economy shed 107000 jobs, and the informal sector lost 28000.

The South African Chamber of Commerce and Industry said yesterday it was concerned about the figures. Proposed labour law amendments before Parliament would bring additional costs to companies and "ultimately reduce future sustainable employment creation", said CE Neren Rau. Proposed restrictions on short-term service contracts would limit the ability of companies to contain costs and retain operational flexibility, he said.

A survey covering 142 countries from the World Economic Forum last year ranked SA 139th on hiring and firing practices, 138th on lack of flexibility in wage setting, and 138th on labour/employment relations, due to "significant tensions".

Mr Lings said job creation could only be generated by a combination of labour regulation, education, competition policy, industrial policy, trade policy, infrastructure development and the exchange rate.

"SA’s high unemployment requires a far more complete and bolder solution, that has the role of the private sector firmly at its core, supported by appropriate infrastructure development," he said.







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