South Africa's jobs market in deep crisis

Job shedding in the permanent jobs market in South Africa accounted for 95.4 percent of all job losses in September, a situation that might affect the 2014 elections, a research group said on Thursday. The South African economy shed 74,523 jobs during September, with the biggest job losses occurring in the permanent jobs sector, which dropped by 71,099 during the month, said Adcorp, a Johannesburg-listed workforce management group. Meanwhile, temporary jobs declined by 3,424 jobs and agencies shed just 319 jobs, Adcorp said in its Employment Index. Since January 2013, the formal sector has shed 260,826 jobs, whereas the informal sector has created 48,828 jobs. Sharp job losses were observed in mining, manufacturing and financial services sectors, amounting to 30,000 job losses between them. Adcorp said the current "malaise around unemployment" could play a significant role in the outcome of the 2014 elections. "It is clear that nothing affects the national political mood more than the sense of security that people feel in their jobs," Adcorp Labor Economist Loane Sharp said in the report. "The swing factor for the 2014 election will come from established workers who have lost faith in their trade unions and who have developed a kind of strike fatigue," he added. Sharp based his conclusion on a decline in both union membership and union member participation in strikes. "The emerging black middle class has the most to lose from uncertain job prospects, because all of the things that the middle class values – political conservatism, property ownership, retirement saving, quality education, insurance against personal adversity, and so on – depends on having a stable and secure job." Two important indicators of the cyclical health of the labor market – namely the involuntary retrenchment rate, which is at an all-time high and the rate of voluntary job changes, which is at an all-time low – suggest that the jobs market is in a deep crisis, Sharp said. "The number of strikes and the number of workdays lost due to strikes and work stoppages has increased steadily in recent years. Just three years ago, the annual strike season lasted fewer than three months whereas now it lasts more than 10 months of the year. The number of economic sectors involved in strikes has expanded greatly," he added. According to Adcorp, a slew of economic indicators, including manufacturing and mining production, export volumes and the exchange rate of the rand, clearly show the adverse impact of strikes. A growing number of notable voices – including the World Economic Forum (WEF), the International Monetary Fund (IMF), the ruling African National Congress (ANC), and even the drafters of the original Labor Relations Act of 1995 – have decried the perpetual conflict in South African labor relations, Sharp added. As part of their research for September, Adcorp also examined the relationship between its Employment Index and that of Statistics South Africa, and found that while there were slight differences in general, the two were similar. There are also two niggling disputes – the first about the scale of work in the informal sector, and the second about sizeable discrepancies between Statistics SA's statistical and administrative data. Adcorp's understanding is that Statistics South Africa's Department of Population Statistics is currently exploring these discrepancies in thorough and serious ways. "Adcorp's databases provide important and comprehensive information, which is unavailable from official surveys, about the labor market's behavior and mechanics. Thus it should come as no surprise that the Adcorp Employment Index bears a close relationship to Statistics South Africa's employment estimates," Sharp noted. He said Adcorp will continue to monitor the discrepancy between Adcorp and Statistics SA's employment figures ahead of elections as a great deal hangs in the balance.