A top-line reading of yesterday’s Quarterly Employment Survey (QES) from Statistics South Africa looks moderately encouraging – non-agricultural formal employment in South Africa rose slightly in the first quarter of 2013 (up 0.1%), and increased by around 1% compared to the first quarter last year.
But top-line readings are superficial and can convey false impressions of what’s happening. So this week, we’re going to take a deeper look at the numbers and try to paint a picture of what’s actually going on in South Africa’s labour markets.
Before we get into the numbers, however, it’s worth pointing out that StatsSA publishes two set of quarterly employment data – the QES and the Quarterly Labour Force Survey (QLFS) – and these two don’t always report the same figures. For example, the QLFS for the first quarter reported a net loss of 25,000 formal jobs, while the QES reports a net gain of 7,000 for the same period. The reason for the difference is that they focus on different things. The QLFS is a household survey that captures a lot of data, including the number of people who are unemployed and the number of people who are employed in the informal sector. The QES is an industry survey that just tracks data on formal sector jobs. In general, the QES is a more reliable measure of formal sector employment, while the QLFS is the best-available picture of the overall labour market. This week, we’re going to focus on the QES to get a sense of what’s happening in the formal job market in South Africa. Next week we’ll look at the QLFS data in more depth.
Let’s start by looking the overall trend in formal employment. As the chart below shows, although things have improved a lot, formal sector employment in South Africa is still below its 2008 peak – in the first quarter of 2013 formal sector employment was about 0.6% lower than it was in the fourth quarter of 2008. That’s bad news, all the more so because the working population has grown in the intervening years and thus this means that a smaller proportion of South Africa’s potential labour force is in formal employment. On the other hand, the steady increase in formal sector jobs over time is a positive sign; employment is up 5% since its low point in the first quarter of 2010, although the growth rate has slowed in the last few quarters.
However, just looking at the overall trends puts us in danger of doing a top-line only analysis. With the overall numbers, we don’t really know where the jobs are being created. To get a better sense of this, let’s look at the differences between public and private sector employment.
Now, unfortunately, the QES doesn’t actually break out employment by the public and private sectors. However, one category of the data, called “Community, social, and personal services,” consists primarily of public sector workers. So the charts below compare employment in this category with employment in all the other categories, which include manufacturing, mining, retail and wholesale, the financial sector, and utilities and transport and communication (which means that employees at state-owned enterprises are being counted as private sector, making this a conservative estimate of the difference between private and public sector jobs).
It’s a little hard to see, but the overall trend is clear – employment in the private sector has declined while public sector employment has grown. To be more precise, since the high point of total employment in the fourth quarter of 2008, private sector employment is down 4.5% while public sector employment is up 11.1%. Since the first quarter of 2008, the public sector has added 314,000 jobs, while the private sector has lost 268,000 jobs. In other words, employment in South Africa is not increasing; it’s more accurate to say that while private sector employment in South Africa is falling, public sector employment is growing. This is not very encouraging news, since its taxes on the private sector that fund public sector employment.
Finally, the charts below show some sector trends (I picked out the ones I found most interesting). First, look at the collapse in manufacturing jobs – since the first quarter of 2008 the number of jobs in the manufacturing sector has fallen by 13%. Construction jobs have also fallen sharply over the period; they’re down 7.5%, while financial sector jobs are down 2% in the period.
Interestingly, and in keeping with the idea that public sector employment is the main driver behind employment, the number of employees in the electricity, gas and water supply category grew by almost 7%. Finally, the number of jobs in the transport, storage, and communication sector grew by 4.4%, representing growth in both public and private sector jobs.
Overall, then, the data show clearly what’s happening in South Africa’s labour markets – the public sector is creating jobs, while the private sector is struggling. If South Africa is going to have a healthy economy, this needs to change.