54,000 jobs lost in May

Recent figures released by the Adcorp Employment Index reveal that the South African employment landscape remains disheartening.

This is primarily owing to a continual decline in permanent work, with 54,184 jobs lost in May. In contrast to this, employment in non-permanent work was sharply up.

Informal employment grew by 8,591 jobs, temporary work grew by 27,250 jobs and agency work grew by 4,555 jobs during the month. Overall, the combined effect of declining permanent work and rising non-permanent work resulted in a total loss of 26,934 jobs.

From an industry perspective, significant job losses were observed in manufacturing (3,000), financial services (5,000) and transport and communications (5,000). Only the public sector created jobs during the month, amounting to 4,000 in government and 4,000 in state-owned enterprises.

Among occupations, only professional occupations (professionals and management) created jobs during the month (17,000).

In the context of a conflicted labour market, temporary employment showed continued growth, despite current legislation which discourages this trend.

Since January 2013, the number of blue-collar temporary workers has increased from 65,256 to 69,732 – an increase of 6,9%. Between April and May, the number increased by 5,254 workers (or 6,3% month-on-month, to say nothing about the annualised increase that this represents of 73,6%). White-collar temporary workers, by contrast, shrunk by 5,6% since January 2013 and white-collar permanent workers shrunk by 7,5% in month-on-month terms between April and May alone.

These figures indicate a structural shift in the labour market whereby mostly blue-collar permanent workers are being outsourced to employment agencies such as Adcorp. This trend can be attributed to the following factors:

  • South African firms are using temporary blue-collar workers in their expansion strategies in the rest of Africa.
  • South African manufacturing firms are continuing to outsource their entry-level positions, which they are still allowed to do under the new labour laws.
  • Entry-level blue-collar workforces do not consist of a mix of permanent and temporary workers, which allows companies to defer or ignore the new ‘equal pay for work of equal value’ provision in the Employment Equity Act, as there are no permanent worker comparisons for equal pay purposes.

The case for temporary staffing solutions within the modern economy is strong, as it offers companies the option of outsourcing non-core activities and staff flexible office hours.

With this in mind, blue-collar temporary staffing, particularly through employment agencies, will continue to grow strongly into the future. Permanent employment is in outright decline, and Adcorp’s modelling suggests that permanent employment will only grow sufficiently to absorb school-leavers when economic growth rises to 4% or more per annum, and will only grow sufficiently to reintegrate informal sector workers into the formal sector when economic growth rises above 8% per annum – neither of which is in prospect for at least several years.

Loane Sharp