“I think the authorities have made a mistake in assuming that our unemployment problem at the moment is largely a structural one. The Reserve Bank has come out and stated as such but they’ve missed in the process, and I think it’s an extraordinary error, that there are certain deep cycles in the labour market at the moment,” Adcorp’s labour economist Loane Sharp told CNBC Africa.
“For example, the rate of resignations of employees is at the lowest level in 15 years. What that means is employees don’t feel confident enough in the labour market to change jobs. The dismissal rate has increased to levels last seen in 2009, so cyclical employment conditions are very weak.”
According to the Adcorp Employment Index, the economy shed 34,654 jobs during August. The biggest losses were seen in the permanent employment space while 12,845 jobs were shed in the temporary space.
Sharp emphasised that employment in South Africa is now at the same weak levels that it was at in 2009, during the peak of the global financial crisis.
“It’s the most significant decline at any time this year. So far the economy has lost more than 185,000 jobs in 2013, which is the worst performance since 2008 and 2009 when the economy lost a million jobs over just seven months,” he explained.
“South Africa’s labour productivity is now at a 46-year low, which in itself is problematic but it’s also problematic in that our real wages are at a 53-year high. There is an incredible stretch between what workers are paid and the productivity that they deliver.”
Adcorp reported that 3.9 million workers were absent during 2013 due to sickness and that cumulatively, since 2000, South Africa has lost 55.2 billion rand in real terms because of it.
Sharp believes that absenteeism due to illness is just one of a number of unintended consequences contributing to South Africa’s labour issues.
“When the economy grows between four and five [per cent], we create enough jobs to absorb all the matriculants who leave the schooling system each year. But the economy needs to grow eight to nine per cent per annum to make substantial inroads into our formal sector unemployment problem,” he stated.
“I’m interested to see how the Reserve Bank’s error of judgement plays out in next year’s general elections because the labour market is the tail that wags the political dog.”