Sign In

Adcorp index indicates that demand for labour continues to slide

Last modified on 1/27/2015 11:49 AM
 

The overall employment situation in South Africa is still negative although there are some initial signs that the negative trend may be bottoming out.

This is according to the recently published Adcorp Employment IndexTM (AEI) which shows an overall third quarter   decline of 0.4% and a year-on-year decline of 18.4%. The AEI (a composite index comprising four underlying indices or ‘quadrants,’ linked to employment in the South African economy) reflects the following trends:

  • The macro-economic component of the index reflects a marginal quarter-on-quarter decline of 0,4% indicating a further softening of macro-economic fundamentals in the South African economy although, the rate of decline has slowed dramatically which may be indicative of a bottoming out of overall economic decline.
  • The demand component of the index indicates that the demand for labour is still in negative territory and, recovery in the labour market may lag overall economic recovery. In this regard, the AEI Demand Index reflects a quarter-on-quarter decline of 1.3% or 13.5% year-on-year.
  • The supply component of the index remains unchanged and, for the third consecutive quarter, supply of labour exceeds the demand for labour.
  • The remuneration component of the index is up quarter-on-quarter by a factor of 1.2%. This is largely due to the impact of inflation-beating wage increases in certain sectors due to high wage demands by organized labour.

A major contributing factor to the continued negative state of employment in the country has been the marked decline of economic activity in the manufacturing sector. In spite of reports of a possible resurgence of economic activity in this sector, demand for labour in the manufacturing sector is down by 11.4% quarter-on-quarter and 39.5% year-on-year. Economic conditions and demand for labour in the construction sector remains relatively unchanged. The mining, retail and wholesale trade sectors have, however, improved slightly with finance, real estate and business services showing the most promise for recovery.

Adcorp CEO Richard Pike said that: “The Index shows that we remain in negative to at best, neutral territory. The strong declines seen in the previous quarters have not been repeated this quarter. As employment tends to lag economic activity, we need to see two or three quarters of sustained, improved economic activity before the overall employment situation in the country moves into more positive territory”.

Rate this article: