south african labour market update loane sharp 2012

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South African Labour Market Update Loane Sharp 2012

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Page 1: South African Labour Market Update Loane Sharp 2012

South African Labour Market Update

Loane Sharp2012

Page 2: South African Labour Market Update Loane Sharp 2012

Unemployment stats• One of post-apartheid’s greatest disappointments is the economy’s failure to

create jobs – 13% unemployment in 1994 to 37% currently• Official labour force size: 17.4 million of which 13 million formally employed

• 4.4 million South Africans are currently unemployed• 2.0 million permanently discouraged about their prospects of finding

work• 2.1 million people underemployed (Stats SA)

• 2.7 million (61%) of those officially unemployed have been out of work for more than a year

• Nearly half (46%) of the economically active population is idle, with a staggering proportion (74%) of these under the age of 24

• By any measure, unemployment is easily South Africa’s most pressing socioeconomic problem

• Who are the unemployed?• Youth, black African, never worked before

Page 3: South African Labour Market Update Loane Sharp 2012

Economic activity and employment

Data sources: South African Reserve Bank, Statistics SA.

50

100

150

200

250

300

350

400

450

0

100

200

300

400

500

600

700

800

1940

1944

1948

1952

1956

1960

1964

1968

1972

1976

1980

1984

1988

1992

1996

2000

2004

2008

Tota

l Non

-Agr

icul

tura

l Em

ploy

men

t (1

940-

1944

=100

)

Econ

omic

Acti

vity

(Gro

ss D

omes

tic P

rodu

ct a

t m

arke

t pr

ices

, con

stan

t 20

05

pric

es, 1

940-

1944

=100

)

Economic activity

Employment

Page 4: South African Labour Market Update Loane Sharp 2012

Problems• Disaffected youth• Increased levels of crime• Political instability and the rise of radicalism• “Xenophobia”• HIV/Aids, alcohol and drug abuse• Significant drain on the country’s financial resources (social grants, NHI, etc)

Causes• Restrictive labour legislation – 138th out of 142 by World Economic Forum• Wage inflation decoupled from labour productivity

• Average wage settlements 2011 – 9.1% (2010 – 8.2%)• Militant trade union activism

• Working days lost due to strike action rose from 2.9m days in 2009 to 14.6m day in 2010

• Education and training not delivering• Regional conflicts resulting in unchecked immigration

Page 5: South African Labour Market Update Loane Sharp 2012

Adcorp Employment Index

Adcorp Employment Index

Data source: Adcorp Analytics.

80

85

90

95

100

105

110

Adco

rp E

mpl

oym

ent I

ndex

(200

5=10

0)

Page 6: South African Labour Market Update Loane Sharp 2012

Typical and atypical employment

Typical employment

Data source: Adcorp Analytics. Data source: Adcorp Analytics.

Atypical employment

80

85

90

95

100

105

110

Perm

anen

t em

ploy

men

t (20

05=1

00)

0

20

40

60

80

100

120

140

160

180

Tem

pora

ry e

mpl

oym

ent (

2005

=100

)

Page 7: South African Labour Market Update Loane Sharp 2012

Skills shortages

Skills shortage by occupation

Data source: Adcorp Analytics.

Data source: Adcorp Analytics.

Skilled workers’ remuneration

Occupation Skillsshortage (000s)*

Manager 216.2Professional 178.4Technician 432.1Clerk 86.6Sales and service worker 104.3Skilled agriculture 3.1Craft and related trade 65.5Plant and machine operator 72.0Elementary worker -967.6Domestic worker -247.4Total -56.8

R 0

R 50 000

R 100 000

R 150 000

R 200 000

R 250 000

R 300 000

R 350 000

R 400 000

R 450 000

R 500 000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Average after-inflation remuneration -high-skilled workers (Rands)

Immigrations Act (2002)

Page 8: South African Labour Market Update Loane Sharp 2012

Labour vs. capital

Usage of labour and capital

Data sources: South African Reserve Bank, Statistics SA.

0

100

200

300

400

500

600

700

800

900

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

Usage of capital

Usage of labour

Page 9: South African Labour Market Update Loane Sharp 2012

Labour vs. capital productivity

Labour productivity

Data sources: South African Reserve Bank, Statistics SA. Data sources: South African Reserve Bank, Statistics SA.

Capital productivity

0.10

0.74

0.31

-0.08-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

1970s 1980s 1990s 2000s

Perc

ent i

ncre

ase

in o

utpu

t due

to a

uni

t pe

rcen

t inc

reas

e in

labo

ur in

put

Labour productivity

0.15 0.14

0.20

0.44

0.0

0.1

0.1

0.2

0.2

0.3

0.3

0.4

0.4

0.5

0.5

1970s 1980s 1990s 2000s

Perc

ent i

ncre

ase

in o

utpu

t due

to a

uni

t pe

rcen

t inc

reas

e in

cap

ital i

nput

Capital productivity

Page 10: South African Labour Market Update Loane Sharp 2012

Migrating to the informal sector?

Number of people running their own small businesses

Data source: Statistics SA.

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

No. running own business

0

50 000

100 000

150 000

200 000

250 000

300 000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

No. trying to start own business

Data source: Statistics SA.

Number of people trying to start their own businesses

Page 11: South African Labour Market Update Loane Sharp 2012

Affirmative action

Number of high-income Blacks

Data source: Statistics SA. Data source: Statistics SA.

Average Black income

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Number of high-income black South Africans (number earning more than the average white income)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Average black income (percentage of average white income)

Page 12: South African Labour Market Update Loane Sharp 2012

Declining union membership

Unionization rate

Data source: Statistics SA. Data source: Statistics SA.

Unionization rate by sector

26%

27%

28%

29%

30%

31%

32%

33%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Unionization rate (percentage of workforce unionized)

4.4%

80.7%

33.6%

55.2%

11.3%19.2%

36.7%

19.8%

59.5%

0.6%0%

10%20%30%40%50%60%70%80%90%

Agric

ultu

re, h

untin

g,fo

rest

ry a

nd fi

shin

g

Min

ing

and

quar

ryin

g

Man

ufac

turin

g

Elec

tric

ity, g

as a

ndw

ater

sup

ply

Cons

truc

tion

Who

lesa

le a

nd re

tail

trad

e

Tran

spor

t, st

orag

ean

d co

mm

unic

ation

Fina

ncia

lin

term

edia

tion,

Com

mun

ity, s

ocia

lan

d pe

rson

al s

ervi

ces

Priv

ate

hous

ehol

ds

Unionization rate per sector

Page 13: South African Labour Market Update Loane Sharp 2012

Strikes and intimidation

Data source: Statistics SA. Data source: Statistics SA.

Strike participation rate Intimidation-related absenteeism

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

2006 2007 2008 2009 2010 2011

Strike participation rate (% of union members)

28 405

77 259

52 832

135 304

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

2008 2009 2010 2011

No. citing violence, unrest orintimidation as the primaryreason for not workingduring the year

Page 14: South African Labour Market Update Loane Sharp 2012

The trouble with Statistics SA’s estimates

Variable

Statistics SA estimate (QLFS

Q4 2011)Actual/verified

figure Source for actual/verified figureUndercount

(percent)

No. of taxpayers (individuals and businesses) 7 263 092 7 998 794 SA Revenue Service Tax Statistics 2011 9.2%

No. of business owners 1 969 767 5 579 767 The Business Trust (2011) 64.7%

Net new business taxpayers 354 694 – SARS Tax Amnesty 2003-2010 17.1%

Net new individual taxpayers 2 512 397 – SARS Tax Amnesty 2003-2010 42.2%

No. of businesses registered for VAT (active businesses only) 574 928 664 267 SA Revenue Service Tax Statistics 2011 13.4%

Percent of employees reporting PAYE/SITE deductions by their employers 57.0% 70.0% SA Revenue Service Tax Statistics 2011 13.0%

Percent of employees reporting UIF deductions by their employers 58.0% 77.4% SA Revenue Service Tax Statistics 2011 19.4%

No. of individual UIF contributors 6 602 197 7 919 290 Unemployment Insurance Fund Annual Report 2011 16.6%

No. of UIF recipients 80 577 183 040 Unemployment Insurance Fund Annual Report 2011 56.0%

No. of medical aid or health insurance principal members 3 712 168 3 612 062 Council for Medical Schemes Annual Report 2011 -2.8%

Compensation of employees (R millions) 1 066 370 1 317 655 Statistics SA GDP Q4 2011 19.1%

No. reporting did not know/specify or refused to disclose income 1 045 730 – Statistics SA QLFS Q4 2011 23.7%

No. receiving wage increments in line with Bargaining Council agreements 1 035 320 1 765 230 National Association of Bargaining Councils (2011) 41.3%

No. receiving social grants (old age, veteran, child support, etc.) 11 500 132 15 028 969 SA Social Security Agency Statistical Report No. 41 (p. 8) 23.5%No. underemployed (vs. no. willing to work additional hours/do extra work) 524 998 2 051 894 Statistics SA QLFS Q4 2011 74.4%

Average undercount (percent) 28.7%

Data sources: Statistics SA Quarterly Labour Force Survey (2001-2011). Other sources as indicated.