Employment up, prospects still bad

More people were employed in October compared to September, according to the monthly Adcorp Employment Index.

However, unemployment was expected to almost triple by 2020 - increasing from the current 6.2 million unemployed adults (including discouraged work-seekers) to 16.8 million in 2020.

"The monthly Adcorp Employment Index finds that employment numbers grew at an annual rate of 2.83 percent in October, with the number of permanent workers having increased by 1.32 percent and the number of temporary workers by 6.47 percent," the survey showed.

October's brighter picture reflected a seasonal ramp-up in staffing levels for the festive season, said Richard Pike, CEO of Adcorp, in a statement.

However, he said: "By our calculations, the number of unemployed will increase from 6.2 million at present (including discouraged work-seekers) to 16.8 million in 2020."

This would increase the narrow unemployment rate of 25.3 percent of adults unemployed up to 45.5 percent between 2010 and 2020.

In October, employment increased in the wholesale and retail trade sectors - at an annual rate of 5.96 percent.

The transport and communication sectors, largely connected with the marketing and distribution of goods and services, expanded employment by 6.92 percent.

Pike said these modest increases indicated retailers and wholesalers expect year-end shopping to be better than in 2009, when there were sharp declines in employment.

Employment in mining increased by 7.72 percent - a result of buoyant commodity markets.

Reflecting a gradual but increasingly firm turnaround in the South African economy, the construction sector increased employment by 4.37 percent.

Manufacturing showed a decline of -6.65 percent, as did financial services by -2.22 percent.

"Especially since 1977, with the appointment of the Wiehahn Commission, and since 1994, with the promulgation of the Labour Relations Act, employment has failed to respond to increases in economic activity in any systematic or significant way," said Pike. The Wiehahn Commission was set up to investigate industrial relations and made far-reaching recommendations on trade unions.

Pike said lagging employment could be ascribed to the declining relative productivity of labour and capital.

"In the first 18 months of incremental expenditure on labour, an employer loses 89.1 percent of his expenditure by way of reduced labour productivity in the first three months.

"Thereafter, while labour productivity gradually rises for 12 months, over 18 months, an employer makes a cumulative loss of R0.49 for every rand spent on labour.

"By contrast, over the same 18 month period, an employer makes a cumulative gain of R1.71 for his incremental expenditure on capital equipment and technology."

Pike blamed this mainly on labour laws and regulations.

"Immigration laws prevent high-skilled foreigners from competing with local workers, with the result that local pay rates for professionals and other high-end jobs are artificially high and productivity is correspondingly lower."

He said the difficulty of dismissing workers meant employers battled to deal with poor performance or low productivity.

"Minimum wage laws and, more broadly, the collective bargaining system ensure that real wages only go in one direction - up - irrespective of worker productivity," Pike added.