Stats SA released the Labour Force Survey (LFS) for Q3 2011 yesterday. The LFS is a quarterly household survey specifically designed to measure the dynamics of employment and unemployment in South Africa, including the informal sector as well as small-scale subsistence farmers. The following is a summary of the key trends in the labour market as at Q3 2011 (see charts attached for further information).
In Q3 2011, there were 32.555 million people aged between 15 and 64 years in SA (up 120 000 relative to Q2 2011, and up 483 000 year-on-year).
Among these people:
17.761 million were economically active (up 98 000 relative to Q2 2011)
13.318 million were employed (up 193 000 relative to Q2 2011)
4.442 million were unemployed (down 96 000 relative to Q2 2011. The number of discouraged workers fell by 3 000 in the quarter)
This implies that the official unemployment rate is now down at 25.0%, compared with 25.7% in Q2 2011. This is a very welcome improvement, but at 25%, the unemployment rate is still extremely high by global standards. Using the expanded definition, the unemployment rate is still well above 30%; reflecting the high level of discouraged workers.
As mentioned above, the number of employed people rose by a very welcome 193 000 in Q3 2011 relative to Q2 2011. This gain in employment occurred mostly in the formal sector (+238 000). The agricultural sector also gained 26 000. In contrast, the informal sector shed 53 000 jobs, while private households lost 19 000.
Over the past year, the SA economy has added an relatively impressive 343 000 jobs. While this is still below the key target level of 500 000, it reflects a significant turnaround relative to recent years. All of the gains in the past year have been in the formal sector (+393 000). In contrast the informal sector has shed 12 000 jobs. There were also losses in agricultural employment (-16 000 in the past year) and domestic workers (-21 000 in the past year).
There remains a significant debate within South Africa regarding the accuracy of the various employment surveys. However, the current trend in the employment surveys suggest that at least SA is past the worst of the job-cutting cycle (see chart 3 attached) and could expect more meaningful gains in employment during the next couple of years. The key question is now how many jobs can SA create? The New Growth Plan has set a target of creating 5 million jobs over the next 10 year. The is a worthy target, but also a very ambitious target. Hopefully, SA’s economic policy will increasingly focus on how to encourage job creation in the private sector.
Clearly, job creation is not merely a function of interest rates or the cost of capital. Other important policies play a crucial role in facilitating job creation, namely fiscal (tax) policy, labour policy, education policy, competition policy, industrial policy, trade policy, exchange rate policy etc etc. Asking monetary policy to consistently solve all of SA’s economic woes is unfair and unrealistic. SA’s high unemployment requires a far more complete and bolder solution, that has the role of the private sector firmly at its core.
South Africa’s unemployment rate remains far too high by historical and international standards, and clearly contributes to much of the social tension and anguish experienced in South Africa on a daily basis. As we have stated on many occasions, increasing the number of people employed in South Africa has to be the number one economic/political/social objective.
