SA labour market experiencing a prolonged slump

South Africa was in the midst of a prolonged slump in the labour market, a labour market index showed on Wednesday.

Solidarity researcher Gerhard van Onselen told Fin24 that there was a small recovery in the index but that a prolonged slump in the labour market was a concern.

“There is slow or no real growth and retrenchments in some sectors,” he said.

Despite an increase from 42.9 to 43.4 the index remained below 50, which represented the “break-even level between rising and falling wage and job security”, according to Solidarity.

Van Onselen said that in general, the labour market had not yet recovered from the underlying structural weaknesses that prevailed since December 2007.

“The danger is that events such as the five-month strike in the platinum sector has caused lasting damage to the labour market,” he said.

He added that various macroeconomic indicators such as the decline in motor vehicle sales and growing risks in the retail sectors indicated a possible further economic downturn that could have a ripple effect on other consumer sectors.

SA’s unemployment rate increased to 25.5% in the third quarter of 2015, Statistics SA announced in October.

Unemployment was up by 0.5 of a percentage point from the second quarter rate of 25%.

The quarterly job and wage security index was compiled by trade union Solidarity and ETM Analytics and was based on a survey of 400 Solidarity members.

Dane McDonald, Fin24