Formal sector sheds jobs
Jobs are "seeping" from the formal sector of the economy into the informal sector, according to Adcorp's latest Employment Index.
More than 10000 jobs were created in the informal sector last month but almost 7000 were lost in the formal sector, mostly because of labour regulations and taxes, said Loane Sharp, labour economist at Adcorp.
Construction, financial services and manufacturing were among the hardest hit .
Employment in the construction industry declined by more than 11%, according to the index, and in manufacturing and financial services by around 4%.
Statistics SA's Quarterly Labour Force Survey, released two weeks ago, paints a different picture.
It showed that as many as 128000 jobs were shed by the informal sector over the last year.
Adcorp's index, however, shows that the informal sector has had 13 consecutive months of jobs growth.
Sharp claims that it is inevitable that formal jobs would be lost because of restrictive labour laws and regulations.
"With SARS registering 385000 businesses as new taxpayers in the past eight years, many enterprises have moved to the informal sector to avoid paying taxes."
The people still employed in the formal sector are the least productive in decades.
Since 1967, output per worker per unit of capital has fallen from R7297 to R4924 a year - a decline of 32.5%, Sharp said. From the peak in 1993, this measure of labour productivity has fallen by 41.2%.
The Labour Relations Act makes it difficult to get rid of unproductive workers and sector-wide bargaining councils have decoupled wage growth from increased productivity, according to Sharp.
Because of this, said Sharp, "wages are no longer an incentive to improved worker productivity".
BOSSES SHOULD ALSO BE PRODUCTIVE
AROUND 96% of South African business owners believe that executive pay should be directly linked to performance, a survey revealed yesterday.
The Grant Thornton International Business Report also showed that more than two-thirds of respondents believe executives at large public companies are paid too much.
"In South Africa and abroad, public companies will face growing scrutiny from the community, investors and industry.
"These businesses need to ensure that their policies are known, understood and transparent, and that reward can be justified by performance," said Jeanette Hern, partner and head of corporate finance.