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Annual Labour Market Bulletin-2011 - Department of Labour

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Annual Labour Market Bulletin > South African labour market in particular amongst youth 20122SECTION2: LABOUR MARKET TRENDS11


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012SECTION 2: LABOUR MARKET TRENDSIt is almost five years since the global financial and economic meltdown of 2008/9 but the world remains with nofuture prospects of strong economic growth. All reports point to the slow global economic growth associated with itsconsequences of unemployment, inequality and poverty, in particular within the emerging economies such as SouthAfrica. Political leaders and economists warn that it is urgent to shift the gears from austerity measures to jobscreation as a key driver of recovery. However, countries have increasingly focused on appeasing financial markets. Inparticular, in advanced economies, the debate has often centred on fiscal austerity and how to help banks withoutnecessarily reforming the bank practices that led to the global crisis 18 .Although the economic conditions have improved relatively in South Africa over the past three years, job creation stillremains restrained in South Africa. There is little improvement in the structure of employment and this means thatthere is still a problem with regard to the shortfall demand and supply of labour in the South African labour market.One of the problems relates to the existence of high proportion of workers in low level occupations like elementaryoccupations and a low proportion of workers in professional and other white collar occupations, e.g. African blacks.Formal sector employment in the country still lags in response to the economic changes resulting in an additionalnumber of women and young workers who have less than matric as the highest level of education achieved withoutjobs. Therefore one may say that the “positive” slow economic growth that has been observed after the recessionin South Africa had not help to reabsorbed the mass of unemployed people particularly youth and women and it hadnot sufficiently improved the living conditions of the majority of Africans as compared to their white counterparts inthe labour force.On the other hand, it is argued that Government must first look at the crisis in education (which is linked to the lack ofrelevant skills in demand), support SMME’s and encourage private sector fixed investment that could assist to respondeffectively to the high level of unemployment in the country. Therefore, there is a need to increase foreign directinvestment 219 in the future because capital is complementary to labour.Section two of the report looks at the changes of the labour market since the economic recovery of 2008/9 untilMarch 2012. This should not be taken as the panel study findings but the purpose is to ascertain how the South Africanlabour market has been performing since the global economic crisis up to now. This is interesting because the trendsare examined using survey and administrative data. However, the focus here is given to youth (15-34 years old)unemployment trends over time. The assumption taken in this report is that there will be no strong job recovery untilwe all understand the importance of youth integration in the main stream of economy and Government’s effectivesupport to SMMEs. Thus, this section considers some selected key indicators to be analysed. These include employment,unemployment, labour absorption, hours worked, youth employment and unemployment, Unemployment InsuranceFund (UIF), job vacancies and work seekers as recorded by both Statistics South Africa and the Department of Labour.18 International Labour Organisation, World of Work Report 2011: Making markets work for jobs, Geneva, 2011, p. VIII19 Foreign Direct Investment (FDI) is needed to create income by employing the unemployed, facilitate the continued production of the physical capitalof bankrupt enterprises, increase the utilization of capacity of manufacturing industries, produce complementary products and consumer surpluses,facilitate the transfer needed technology and skills from international countries, expedite exports, provide financial and other required services.12


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Table 2: Economically Active Population (EAP) by province (‘000)Provinces Jul-Sep 2009 Jul-Sep 2010 Jul-Sep 2011 Jan-Mar 2012Eastern Cape 1 718 1793 1781 1 783Free State 1 061 1091 1 109 1 087Gauteng 5 013 5 402 5 517 5 596KwaZulu-Natal 3 024 2 990 3 103 3 168Limpopo 1 207 1 208 1 271 1 275Mpumalanga 1 185 1243 1 285 1 310North West 1 094 991 952 954Northern Cape 365 372 387 382Western Cape 2 409 2 281 2 356 2 393RSA 17 076 17 371 17 269 17 948Source: Statistics South Africa, Quarterly Labour Force Survey, Stats release P0211••Table 2 above shows the number of working age population that was actively engaged in the labour marketin the nine provinces of the country. Overall, the country has shown an average of 17 416 of those who wereemployed and unemployed (labour force) from quarter three of 2009 to quarter one of 2012. It is an indicationthat the labour force is not really growing at the expected level to bring new entrants into employment. Byensuring that more people enter the labour force, the domestic productivity and demand will increase whichin return might assist companies to generate a number of new jobs in the formal and informal sector in theshort-run••Provincially, Gauteng had the highest number of economically active people followed by KwaZulu-Natal andthe Western Cape while Northern Cape had the lowest number of economically active people due to its smallpopulation size as shown in Table 2. This distribution has a major consequence in the South African labourmarket since it reinforces internal migration from unsustainable to sustainable provincial economy. It is alsoobserved that the benefits received from these three provinces are not equally injected to small provinces inorder to stimulate provincial economic growth. Thus there is a need for provincial economic integration in thecountry to allow less mobility of resources from one province to another. Real investment should be spreadacross provinces to stimulate the provincial economy that increase consumption and creates jobs• • Overall, the South African labour market is at the risk to remain unequal if the internal migration trends arenot properly managed. There is no doubt that people will choose to stay in industrialised provinces becauseof the availability of job opportunities and higher wages than non-industrialised provinces. The failure ofagriculture and mining industries to create jobs in non-industrialised provinces is one of the reasons whypeople move to industrialised provinces to search for jobs in industries like manufacturing, construction, andtransport where some jobs had been noted in the past years.13


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Table 3: Labour Force Absorption Rates* (%)Provinces Jul-Sep 2009 Jul-Sep 2010 Jul-Sep 2011 Jan-Mar 2012Eastern Cape 31.4 31.6 31.1 30.4Free State 40.6 41.3 44.1 39.2Gauteng 51.9 51.4 50.9 52.6KwaZulu-Natal 38.5 36.0 37.3 36.9Limpopo 28.8 27.5 30.5 29.3Mpumalanga 39.7 38.7 39.0 38.8North West 36.1 35.9 33.3 34.3Northern Cape 36.0 38.7 38.6 39.4Western Cape 53.3 51.7 52.4 53.2RSA 41.3 40.5 40.5 40.9Source: Statistics South Africa, Quarterly Labour Force Survey, Stats release P0211*Note: The rate is the percentage of all persons aged between 15-64 years who are employed.••Table 3 provides an alternative indication to the unemployment rate regarding the lack of job opportunities inthe labour market. It shows the capacity of the provincial economy to create jobs for those who are activelysearching for jobs. Looking at the trends over time, only Gauteng and Western Cape had demonstrated a strongeconomy to pull the mass of unemployed people into employment••The labour absorption rates remained higher than the average labour absorption rate in the country over time.Limpopo recorded almost the same absorption rate over the same period and that had also remained very lowas compared to other provinces••Even though the country’s average absorption rate was at 40%, this is regarded as low compared to otheremerging countries. In this regard, the International Monetary Fund (IMF) working paper provides a clearmessage that the South African labour market is less competitive than other emerging markets and it isessential for this imbalance to be urgently addressed in order to create more jobs 320 .2.1. The South African Labour Force2.1.1. EmploymentThe end objective of a nation, despite its economic, political, and social scenarios, is the “well-being” of its people.The multi-faceted connotation of “well-being” is captured by what is termed in economics as development withits focus on both growth, distribution, and interlink. The important issue is whether the link runs from growth todistribution or the other way round 421 . Since 1996 much of the focus has been on the link between economic growthand distribution. Government introduced policies such as Accelerated Shared Growth Initiative for South Africa (ASGISA), Industrial Policy Action Plan (IPAP), New Growth Path (NGP), and other policies to boost economic growth inorder to achieve the objectives of employment-creation and social justice in terms of desirable income distribution.However, the country’s level of poverty (using the poverty line of R515 in 2008), high unemployment rate and incomeinequality are still adversely affecting economic growth and this might lead to social unrest, political instability andother illegal activities.20 South African Chamber of Commerce and Industry CEO Neren Rau (2012), Polity.org.za, 13 April 201221 Ananda, V. K., (2009), Mainstream, Vol XLVII, No 25, June 614


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Furthermore, the combination of a rapidly growing labour force with declining employment opportunities in thecountry is significantly compounding the employment, income distribution and poverty alleviation issues. As a result,employment creation should continue to be a policy priority.Table 4: Number of Employed by province (‘000)Provinces Jul-Sep 2009 2010-2009 Jul-Sep 2010 2011-2010 Jul-Sep 2011 Jan-Mar 2012Eastern Cape 1 258 48 1 306 -8 1 298 1 279Free State 758 10 768 58 826 737Gauteng 3 719 239 3 958 25 3 983 4 140KwaZulu-Natal 2 458 -57 2 401 109 2 510 2 519Limpopo 899 6 905 121 1 026 996Mpumalanga 881 9 890 21 911 913Northern Cape 255 21 276 2 278 286North West 789 -75 714 -34 680 704Western Cape 1 868 -114 1 754 52 1 806 1 847South Africa 12 885 87 12 972 346 13 318 13 421Source: Statistics South Africa, Quarterly Labour Force Survey, Stats release P0211, own calculations••Table 4 shows employment changes in year on year by province. Between 2009 and 2010, Western Cape(114 000) was the most affected by employment reduction, followed by North West (75 000) and KwaZulu-Natal(57 000). However, North West remained affected with job losses between 2010 and 2011. In other words,the most urbanised provinces had quickly closed the gap from the previous trends as a result of provincialinitiatives and projects that were put in place in order to stimulate employment growth as shown in Table 4••Employment loss in agriculture during the third quarter of 2010 led to an employment decline in the EasternCape in the third quarter of 2011 and in the first quarter of 2012. On the other hand, the Western Cape andKwaZulu–Natal employment fell in the third quarter of 2010 and gained momentum in the same quarter of 2011and slightly in the first quarter of 2012. This was due to the poor performance of the tourism and hospitalityindustries due to the winter season and also the end of contract work in the trade industry during the festiveperiod of December• • Table 4 also shows that Gauteng had the highest number of employed people followed by KwaZulu-Natal whilethe Eastern Cape and Western Cape were the two provinces that had more than one million employed peoplein South Africa.15


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Table 5: Number Employed by IndustryIndustries Jul-Sep 2009 2010-2009Change(‘000)Jul-Sep 2010 2011-2010ChangeJul-Sep 2011 Jan-Mar 2012Agriculture 653 -13 640 -16 624 656Mining 299 4 303 21 324 336Manufacturing 1 723 -10 1 713 24 1 737 1 722Utilities 81 18 99 -26 73 91Construction 1 057 19 1 076 10 1 086 986Trade 2 852 95 2 947 65 3 012 3 057Transport 737 36 773 -17 756 783Finance 1 682 -57 1 625 143 1 768 1 741Community 2 627 51 2 678 158 2 836 2 891Private households 1 166 -47 1 119 -21 1 098 1 151South Africa 12 885 88 12 973 345 13 318 13 422Source: Statistics South Africa, Quarterly Labour Force Survey, Stats release P0211, own calculations••Following the employment loss in 2008/9 as a result of global economic crisis, some industries were badlyaffected in both year to year comparisons. These were agriculture and private households. However, theseindustries recovered in March 2012 from September 2011. Table 5 shows that the economy created 88 000 jobsin September 2010 from September 2009••A total of 345 000 jobs were recorded between September 2010 and 2011. While this employment trend mightprovide a useful insight about the linkage between economic growth and job creation, there were only twomain industries that remained consistent with job creation on year on year comparisons. Trade and communityindustries are becoming the most critical industries, performing better than other industries and there areindustries that need promotion in line with the South African Government’s commitments of creating fivemillion jobs by 2020. However, the questions are why only these two sectors and what is the private sector’scontribution? It might appear like the public sector is committed to employ more people than the private sectorwhereby the issue of relevant skills and experience remain a barrier to access to employment opportunities.In the community industry which also includes Government, job opportunities are offered even to low-skilledpeople in various projects such as in the construction sector and other infrastructure projects••Looking at the trade employment growth over time, for example, some panel studies conducted in SouthAfrica stressed the following findings: out of those who were self-employed in 2008, about 63% remainedself-employed in 2010. Furthermore, 93.2% of workers remained in regular employment in 2010 from thetotal of workers who were in regular employment in 2008 522 . This might indicate the benefits of working in theinformal sector as a critical sector in the South African economy. It appears that the sector starts to attractmore unemployed people.22 National Income Dynamics study (NIDS), 2012 Wave 2 overview, Preliminary findings released at the Presidency, 14 June 201216


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Table 6: Number of employed by industry and genderJul-Sep 2009 Jul-Sep 2010 Jul-Sep2011 Jan-Mar 2012Industry(‘000)Male Female Male Female Male Female Male FemaleAgriculture 406 244 395 208 419 205 443 213Mining 262 34 276 37 292 31 293 43Manufacturing 1 145 563 1 174 629 1 156 580 1 165 557Utilities 58 12 66 28 60 13 77 14Construction 898 123 923 110 975 112 880 107Trade 1 430 1 396 1 565 1 397 1 599 1 414 1 606 1 452Transport 593 173 597 130 616 140 621 162Finance 948 685 969 662 987 781 993 748Community 1 089 1 568 1 207 1 621 1 164 1 672 1 176 1 715Private Household 268 901 255 863 239 860 263 888Source: Statistics South Africa, Quarterly Labour Force Survey, Stats release P0211, Quarter 1, 2011••Table 6 indicates the distribution of employment by industry and gender. The purpose is to understand why moremen or women are interested in one or another industry. The findings show that women are overrepresentedin the community and private household industries while their male counterparts are overrepresented in allother industries. Number of employed women in community and trade industries increased from September2010 to September 2011• • Overall, the decline of women employment statistics together with social status needs to be considered inview of inequality in the labour market. Any economic growth and job creation that is recorded in the countryshould attract both women and men out of the unemployment pool despite their population distribution in thecountry.17


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Figure 3: Employment in the formal non-agricultural sector2 5002 000Number of Employees ('000)1 5001 0005000Mining Manufacturing Elecricity Construction Wholesale Transport Finance CommunityDec-09 488 1 185 56 415 1 665 359 1 796 2 199Dec-10 540 1 164 58 399 1 687 361 1 812 2 266Dec-11 518 1 158 60 425 1 703 369 1 830 2 318Source: Statistics South Africa, Quarterly Employment Survey (QES Dec 2009/10/11)••Figure 3 illustrates the quarterly employment trends from December 2009 to December 2011. The resultsare estimated through the enterprise-based survey in the formal non-agricultural sector. A relatively smallpercentage of employment growth has been recorded in the formal non-agricultural sector. The percentagechange between quarters ended December 2010 and December 2011 was about 1.6%• • The QES figures confirm that the South African labour market continues to struggle. Employment growthremains minimal, despite economic growth measured in the growth of the Gross Domestic Product (GDP) atan average of between 3 and 4% over the same period. This indicates a risk into the future to achieve the fivemillion new jobs by 2020. Nevertheless, government initiatives on the implementation of large scale projectdevelopments such as electricity plants, rail and road upgrades and water management bring hope to thecitizens that it will stimulate economic growth, create and sustain jobs especially in the labour intensiveindustry, e.g., construction industry.19


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Table 8 : Hours worked by gender (‘000)Hours of work(per week)Jul-Sep 2009 Jul-Sep 2010 Jul-Sep2011 Jan-Mar 2012(‘000)Male Female Male Female Male Female Male Female< 15 hrs 108 164 92 139 87 140 76 14215-29 hrs 269 543 250 495 293 485 282 52930-39 hrs 356 615 355 609 371 586 391 59840-45 hrs 3 855 3 009 4 080 3 051 4 157 3 232 4 175 3 202> 45 hrs 2 515 1 485 2 596 1 308 2 602 1 364 2 595 1 432Total 7 103 5 816 7 373 5 602 7 511 7 520 5 807 5 902Source: Statistics South Africa, Quarterly Labour Force Survey, Stats release P0211••Table 8 indicates that more workers (men and women) are working for longer hours, especially between40-45 hours per week. The number of workers increases for both men and women over time. Time spend in theproduction of goods and services might be used as a proxy measurement of productivity levels in the firm or an“effective” service delivery indicator in the case of the public sector••On the one hand, the number of hours a person works depends on the occupation and industry that a personis employed in, for instance long working hours were prevalent in the skilled trade occupations like processplant and machine operators. People who work in administrative and secretarial occupations were less likelyto work for more than 45 hours per week. On the other hand, people who work in the agriculture and privatehousehold industries were more likely to be working for more than 45 hours per week. These industries includeemployees and self-employed••Of even greater concern, some workers (both men and women) are still working for less than 15 hours perweek. It is an indication of the existence of temporary job either in the formal or informal sector. In otherwords, eradication of irregular workers remains another challenge in the South African labour market as thepanel study has shown that out of those who were casual workers in 2008, about 14% remained in irregularemployment in 2010. Furthermore, 45% of of those who were employed in 2008 remained in employment in2010 despite their wages which were too low 123 .2.1.2. UnemploymentThe recession took an immense toll on the livelihood of ordinary people in our country. Employment has declined by1.1 million from the end of 2008 until the third quarter of 2009, and by March 2012, 25.2% of the labour force remainsunemployed. The young and the unskilled have been worst affected by the recession. Unemployment of young peopleaged 15-34 years old has increased by 43 000 in the first quarter of 2012 following a decrease of 14 000 in the thirdquarter of 2011.The economic downturn also presented major challenges for companies. A large number of companies had to cutcosts or restructure their operations to restore profitability. The companies are reluctant to hire more people and beresponsive to changing economic circumstances as the economy continues on its gradual recovery path. However, it isimportant to remain focused on the goal of achieving faster and more sustainable economic growth and the creationof decent jobs particularly for the low-skilled and the youth.23 NIDS, Op cit, 201220


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012The ability of companies to grow and create employment is limited by the available inadequate skilled labour andlimited labour supply. This is one of the reasons the South African Government believes that skills development shouldcontinue to remain one of the top priorities of the national development agenda.Unemployment, both its level and its rate, has moved upward since early 2009. Below, the report presents somecritical findings regarding youth (15-34 years old) trends in the labour market.Table 9: Unemployment rates (%) by provinceProvinces Jul-Sep 2009 2010-2009Y10-Y09ChangeJul-Sep 2010 2011-2010Y11-Y10ChangeJul-Sep 2011 Jan-Mar 2012Eastern Cape 26.8 0.4 27.2 -2.5 24.7 28.3Free State 28.6 0.9 29.5 -2.4 27.1 32.2Gauteng 25.8 0.9 26.7 0 26.7 26.0KwaZulu-Natal 18.7 1.0 19.7 0.1 19.8 20.0Limpopo 25.5 -0.4 25.1 -8.2 16.9 21.9Mpumalanga 25.7 2.7 28.4 0.3 28.7 30.3Northern Cape 29.9 -4.1 25.8 -1.5 24.3 24.9North West 27.9 0.1 28.0 -3.8 24.2 26.2Western Cape 22.5 0.6 23.1 -1.2 21.9 22.8South Africa 24.5 0.8 25.3 -1.3 24.0 25.2Source: Statistics South Africa, Quarterly Labour force Survey (QLFS) Stats release P0211••Looking at Table 9, it is interesting to observe that KwaZulu-Natal and the Western Cape remained the onlytwo provinces that kept the unemployment record below the national average rates overtime. In general,however, changes in unemployment rates are minimal over time in the country as a whole. This implies thatthe structural unemployment will remain with us because of the level of contraction in the current labourmarket. As a result, one would expect that more people will become discouraged work seekers. The lack ofjob searching is not the outcome of preferences or “tastes” but of constraints. It is reported that the maindiscouragement factors include a low likelihood of finding a job (high local unemployment, long durationof unemployment), poverty (access to water etc.), limited access to transport and facilities, high cost ofsearching 2 4 , etc.••Following this, the changes in the number of discouraged work seekers should be regarded as a critical indicatorto gauge the capacity of the South African economy to attract new entrants into the labour force. Policymakers should now devise some interventions to minimise the growing number of discouraged work seekers inthe country as a whole.24 Kingdon and Knight (2000;17; 2000:4-5) cited by Fourie, F.C.v.N (2011), The South African Unemployment debate: Three worlds, three discourses?,Southern Africa and Development Research Unit (SALDRU), Working paper series No. 63, p.921


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Table 10: Labour Force Absorption Rates* (%)Level of education Jul-Sep 2009 Jul-Sep 2010 Jul-Sep 2011 Jan-Mar 2012No Schooling 90 79 81 80Less than primary completed 370 370 302 305Primary completed 225 213 205 193Secondary not completed 1 918 2 028 2 085 2 119Secondary completed 1 322 1 424 1 476 1 520Tertiary 239 248 260 280Other 29 35 34 29Total 4 193 4 397 4 443 4 526Source: Statistics South Africa, Quarterly Labour Force Survey, Stats release P0211Individual’s education level, is used as an explanatory variable in explaining (un) employment probabilities of labourmarket dimensions. An international forum on youth unemployment concluded that barriers to education, a lack ofappropriate education and a mismatch between skills gained through education and job opportunities are contributingfactors to youth unemployment 125 . In South Africa, a macro sectoral analysis by Banerjee et al (2008) and Rodrik (2006)noted that agriculture, mining and manufacturing have been the activities most intensive in unskilled labour. But theyalso have been the sectors in relative decline. This structural shift away from the most low-skills intensive parts tothe skilled parts resulted in skills supply and demand mismatches. It is the key to understanding the concentration ofunemployment among the young unskilled and black population (Rodrik 2006:2) 26 .••Table 10 shows that unemployment in the country is concentrated amongst people who have not completedsecondary education. This trend is shown over time since 2009 up to now. Thus, the puzzle remains to investigatewhy more youth do not complete matric to increase the probability of a transition into employment and ratherchoose to leave school early to join the ranks of the unemployed, often for long periods••It might be a concern to see that more than 200 000 people with tertiary education remained unemployedfrom 2009 up to 2011. A panel study could assist here to see if these are the same people and what kind ofskills was acquired against the needs of the domestic economy. Otherwise, it might indicate the likelihood ofthose educated unemployed people to remain and increase their search for job opportunities than becomingdiscouraged. The statistics have shown that out of those who were searching for jobs in 2008, 32% crossed intoemployment and 7% were discouraged in 2010 327 .25 World Bank, Global crisis of youth Unemployment, www.worldbank.org26 Banerjee et al (2008) and Rodrik (2006:2) cited by Fourie, F.C.v.N (2011), The South African Unemployment debate: Three worlds, three discourses?,Southern Africa and Development Research Unit (SALDRU), Working paper series No. 63, p.2327 NIDS, Op cit,22


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Figure 4: Period of being unemployed3 5003 0002 8913 029 3 0692 5002 489Number ('000)2 0001 5001 7031 5051 413 1 4571 0005000Jul-Sep 2009 Jul-Sep 2010 Jul-Sep 2011 Jan-Mar 2012Long-term unemploymentShort-term unemploymentSource: Statistics South Africa, Quarterly Labour Force Survey, Stats release P0211••Figure 4 shows an increase in the number of people who had been unemployed for a year or more sinceSeptember 2009 whilst the number of those who had been unemployed for less than a year had decreased from1 703 000 in September 2009 to 1 413 000 in September 2011. Overall, more than 67% of the unemployed havebeen unemployed for a year or more in March 2012••The labour market is still far from normal by any measure, and millions of workers continue to suffer thehardships of not being able to find suitable employment. Although unemployment is disruptive or costly, thepersistently high rate of long-term unemployment recorded over the past three years remains a concern inthe country. People unemployed for a long time have historically been unable to find jobs as easily as thoseexperiencing short-term unemployment, possibly because their skills erode, they lose connection within thelabour market, or they acquire a stigma that deters firms from hiring them. It is noted that the loss of skills andlower rates of employment reduce the economy’s overall productive capacity over the longer term.2.1.3. Youth (15-34 years) in the labour forceThe data confirms that the labour market in South Africa has not fully recovered from the global economic crisis of2008. Despite the moderate economic recovery, the economy has not created enough jobs to lower the persistenthigh unemployment rate among youth and women. The labour market for young people continues to show worryingdevelopments, youth unemployment rate is stagnant at almost 36% from September 2009 to March 2012.The job crises have hit young people hard, because young graduates have encountered difficulties in findingemployment. At this stage, Government is urgently seeking new interventions to tackle the crisis. The debate is23


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012now centred on the youth employment subsidy which could make the training of young workers more affordable toemployers, particularly smaller employers. As reported, a youth employment subsidy lowers the relative cost of hiringa young person (while leaving the wage the employee receives unaffected) and therefore increases demand for youngworkers.On the other hand, Government must make sure that the economy creates enough jobs so that they (youth) do notbecome part of a lost army of the long-term unemployed. Once they are in the long term unemployment army, theybecome discouraged and leave the labour market altogether. And when people lose touch with the labour marketaltogether, the loss of skills and motivation has dire personal and social consequences.Figure 5: Labour absorption rates by age group60.0%50.0%56.2%55.2% 56.2%55.8%Percentages40.0%30.0%20.0%41.3% 40.5% 40.9% 40.9%31.0% 30.1% 30.0% 30.3%10.0%0.0%15-34 yrs35-64yrs15-64 yrsJul-Sep2009Jul-Sep2010QuartersJul-Sep2011Jan-Mar2012Source: Statistics South Africa, Quarterly Labour Force Surveys, Stats release P0211••Figure 5 shows that labour absorption rate in the country had remained virtually the same between 40% and41%. It is noted that the recession has strengthened the labour market contraction that maintained higherabsorption rates for adults than youth over time. As the youth unemployment become common, it also exposedthe country to a higher risk of low productivity and demand which in turn will affect the level of economicgrowth• • In general, the country needs to provide in particular to young men and women with the skills needed inthe economy to enter the market place. It is reported that countries that have had some success in raisingemployment among young people have closely linked vocational training with the labour market needs.24


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Table 11: Employed youth (15-34 years) by genderJul-Sep 2009 Jul-Sep 2010 Jul-Sep 2011 Jan-Mar 2012Age(‘000)Male Female Male Female Male Female Male Female15-19 84 58 71 54 77 50 87 4420-24 719 521 724 486 704 466 702 47225-29 1 251 911 1 180 907 1 224 867 1 234 91230-34 1 257 996 1 322 953 1 324 1 002 1 335 1 010Total 3 310 2 486 3 297 2 400 3 329 2 385 3 358 2 438Source: Statistics South Africa, Quarterly Labour force Survey, Stats release P0211••Table 11 shows a slow pace of employment growth for both males and females between the ages of 15 to34 years. As discussed before, male employment in all ages is higher than female employment, besides theimproved educational status of women••The Employment Equity Act of 1998 attempts to break the occupational segregation of traditionally acceptedmale and female work by opening entry for female workers to occupy professional and managerial posts. As aresult women are slowly penetrating professions which were traditionally dominated by men.Table 12: Educational level of the employed youth (15-34 years) by genderJul-Sep 2009 Jul-Sep 2010 Jul-Sep 2011 Jan-Mar 2012Educational level(‘000)Male Female Male Female Male Female Male FemaleNo schooling 37 17 38 21 35 10 37 11Less than primary186 77 170 72 207 88 177 69completedPrimary completed 146 51 125 67 111 51 120 55Secondary not1 245 777 1 263 786 1 318 752 1 321 789completedSecondary completed 1 200 1 003 1 201 951 1 157 943 1 185 960Tertiary 459 542 459 452 469 519 472 526Other 38 18 38 18 33 23 46 20Total 3 311 2 485 3 294 2 367 3 330 2 386 3 358 2 430Source: Statistics South Africa, Quarterly Labour force Survey, Stats release P0211••The statistics in Table 12 show worrying facts for both employed young men and women with low educationalachievements. More than one third of employed young males or females has either completed or not completedsecondary school over time. However, few of them have achieved tertiary educational level while they arecurrently employed• • The increase in the number of workers in September 2011 from September 2009 who have completed theirtertiary education is a positive trend that can allow one to escape the shortages of certain skills demandedin the economy. It is noted that skills shortages have been identified as the binding constraints to achieve25


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012higher and shared economic growth in the country. Thus, the Government interventions and funding for skillsdevelopment in the country which are detailed in the National Skills Development Strategy (NSDS) should beapplauded••In general, it is interesting to note that the educational status of women in the labour market had graduallyimproved, although they are still unemployed or if employed, they occupy elementary jobs like domesticworkers and clerks.Table 13: Employed youth (15-34 years) by industry and genderJul-Sep 2009 Jul-Sep 2010 Jul-Sep 2011 Jan-Mar 2012Industry(‘000)Male Female Male Female Male Female Male FemaleAgriculture 190 108 205 105 193 97 202 94Mining 97 23 99 17 115 17 119 27Manufacturing 514 258 503 247 485 231 506 233Utilities 17 7 24 16 23 6 29 6Construction 479 66 463 47 466 46 411 39Trade 771 722 799 710 827 723 848 733Transport 251 69 245 83 271 59 252 83Finance 525 411 468 333 470 374 489 380Community and social 369 546 381 534 382 570 384 561servicesPrivate households 97 274 107 274 98 262 118 282Other 1 2 0 1 0 0 0 1Total 3 311 2 486 3 294 2 367 3 330 2 385 3 358 2 439Source: Statistics South Africa, Quarterly Labour force Survey, Stats release P0211••More than half of the employed youth are employed in trade, construction, finance and manufacturingindustries as shown in Table 13. In most of these industries, young people are mostly offered part-time orcontract employments which are mostly facilitated through labour brokers••In the international economy (G20 economies), a growing share of the workforce is employed on fixed-termand other temporary contracts. In nearly half of them, the incidence of temporary employment lies between10 and 25% with a high share of women and youth employed on such contracts 428 . In South Africa, however, thecurrent debate is about banning or regulating the labour brokers. While negotiations are still underway, theGovernment first drafts on labour law amendments suggest that the labour brokers should be regulated toeliminate the expected abuse that workers are subjected to.28 A joint report by the ILO, OECD, IMF and the World Bank: Boosting jobs and living standards in G20 countries, p. 3, unpublished26


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Table 14: Employed youth (15-34 years) by occupation and genderOccupationJul-Sep 2009 Jul-Sep 2010 Jul-Sep 2011 Jan-Mar 2012(‘000)Male Female Male Female Male Female Male FemaleManagers 172 100 180 93 189 115 183 109Professionals 154 157 147 147 146 152 178 155Technicians 273 254 263 233 279 260 277 271Clerk 217 562 214 518 217 514 228 516Sales and service 556 486 549 461 576 464 539 483Skilled agriculture 11 5 18 5 10 4 9 4Craft and related trade 677 96 677 85 651 74 652 85Plant and machine401 80 394 75 387 67 404 53operatorElementary 1 031 295 997 326 1 047 292 1 084 278Domestic worker 9 262 12 264 16 254 10 278Total 3 501 2 297 3 451 2 207 3 518 2 196 3 564 2 232Source: Statistics South Africa, Quarterly Labour force Survey, Stats release P0211••Table 14 shows that the demand for labour in all occupations had been fluctuating over the last three years.From 2009 to 2011, employment of youth males was dominated in the elementary work and that of females inthe clerical work. There is a low number of youth, more especially women, who occupy high level posts likemanagers, professionals and technicians probably due to their lack of education and skills needed to occupythese positions. As a result, these young men in particular are often given the most dangerous and physical jobswithout training or security measures 529 .29 International Labour Organisation, Breaking gender barriers for young women and men,www.ilo.org/youth27


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Table 15: Unemployed youth (15-34 years) by education and genderEducational levelJul-Sep 2009 Jul-Sep 2010 Jul-Sep 2011 Jan-Mar 2012(‘000)Male Female Male Female Male Female Male FemaleNo schooling 9 6 8 10 15 7 10 6Less than primary123 54 122 71 95 39 93 41completedPrimary completed 74 54 66 40 64 51 50 45Secondary not733 691 756 721 704 795 744 775completedSecondary completed 505 598 637 521 621 563 654 570Tertiary 73 116 72 113 73 119 74 129Other 9 6 12 6 11 10 6 15Total 1 526 1 525 1 673 1 482 1 583 1 584 1 631 1 581Source; Statistics South Africa, Quarterly Labour force Survey, Stats release P0211••Lack of employment opportunities and inequality appear to be driving numerous protests that one can observeacross the globe. This is an important element to consider while drafting interventions and policies to respondto the high youth unemployment in the country. The critical infrastructure projects that created jobs for theunskilled labour force in South Africa came to an end after the world cup and that pushed the youth back tounemployment. With this in mind, the South African Government must encourage youth to complete theirstudies in order to stand a better chance of getting decent work in future. Thus, the youth labour market needsimmediate support from all stakeholders either in the private or public sector• • Table 15 shows that a small number of youth with tertiary qualifications remains unemployed as opposed tothe ones that completed secondary school and those that didn’t complete secondary school for both male andfemale over the three years under review. Unemployed males remained over-represented across educationallevels except in tertiary education.28


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Figure 6: Youth (15-34 years) new entrants in the labour market900800700Number ('000)6005004003002001000Jul-Sep 2009Jul-Sep 2010Jul -Sep 2011Jan-Mar 201215-19 20-24 25-29 30-34162 667 436 220180 794 541 254172 780 564 254183 851 535 235Source: Statistics South Africa, Quarterly Labour force Survey, Stats release P0211••New entrants are mostly young with big dreams, ambitions and keen to get their lives off the ground. But SouthAfrica’s restless army of jobless youth with few opportunities is growing more and more desperate by the day.With massive youth unemployment, the future is particularly bleak for millions of young South African’s forwhom economic liberation remains a pipe dream 630 .••The number of new entrants into the labour market is high among the 20-24 year-olds and low among the15-19 year olds in the three year period, as shown in Figure 6. Out of the total new entrants (1 973 000) inSeptember 2011, for example, about 90% of new entrants were youth (15-34 years) and about 40% of themwere in the age group of 20-24 years. These are the same people who lack relevant skills and experience as aresult of limited school achievements and drop-outs but they are keen to get employment to escape inequalityand poverty in the country.30 City Press, Young, jobless and desperate, 10 June 2012, p.1029


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Figure 7: Youth (15-34 years) discouraged work seekers700600500Number ('000)400300200100015-19 20-24 25-29 30-34Jul-Sep 2009 110 449 364 235Jul-Sep 2010 136 534 454 283Jul -Sep 2011 150 579 501 319Jan-Mar 2012 157 615 525 339Source: Statistics South Africa, Quarterly Labour force Survey, Stats release P0211••There is a need for transition of discouraged work seekers into the labour force in particular in employmentbut this happens when the economy demonstrates a quick response against the high demand for labour in thedomestic labour market. However, in the presence of various challenges that include fiscal constraint, theglobal economic crisis, lack of skills and limited productivity gains, the number of discouraged work seekerswill remain almost constant. Overall, it appears that more and more youth (15-34 years) became discouragedto search for work over the three-year period. In September 2011, 70% of discouraged work seekers were youthfrom a total of 2 204 000 discouraged work seekers in the country••Figure 7 confirms that the number of youth discouraged work seekers had increased from September 2009 toMarch 2012. The current economic recovery is not creating enough jobs to attract and absorb the discouragedyouth which arises concerns about the quality of jobs being created. A survey conducted by the South AfricanInstitute of Race Relations found out that 51% of South Africans between the ages of 15 and 24 are unemployed.And there is no evidence things are going to improve fast. The survey claimed the average job created bya Government programme lasts 46 days. It is particularly worrying because the longer young people areunemployed, the more unemployed they become 731 .31 Business Day, 20 June 2012, p.1130


Annual Labour Market Bulletin > South African labour market in particular amongst youth 20122.2. Trends in the Labour market using selected administrative indicators2.2.1. Unemployment Insurance Fund (UIF) claimsUnemployment insurance data can also be used to track and gauge the changes in the labour force in real time in theeconomy. The higher the number of claims received might indicate that the labour market is unattainable because ofvarious factors such as the existence of low productivity and profits in companies as a result of the global economiccrisis, closure of businesses and high labour costs.UIF is a temporary financial relief that can assist a person (contributor to UIF) in transition to another job after beingdismissed or retrenched. The situation becomes worse when one cannot find an alternative if the benefit is exhaustedbefore a new job is secured. Thus, it is always good to have a healthy economy and labour market that stimulate ahigh level of productivity in order to create more sustainable employment.Much progress has been made in various provinces despite the global economic crisis. Out of the total number ofUI claims processed, the Department of Labour has approved and paid on average more than 145 000 claims in thethree-year period from September 2009 to September 2011. For example, in the first quarter of 2012, 141 474claims were approved and payments received from unemployed individuals. In relation to the labour market, UI datasignals that unemployment is still persistent as most of those who claims for UI benefits reported to be dismissed orretrenched as a result of short-term or temporary employment.2.2.1.1. Ordinary Unemployment ClaimsTable 16: Comparison of approved Ordinary Unemployment Claims by provinceProvince Jul-Sept 2009 Jul-Sept 2010 Jul-Sept 2011 Jan-March 2012Eastern Cape 16 724 9 905 12 055 11 531Free State 8 622 7 567 6 338 6 381Gauteng 53 746 36 085 39 216 39 899KwaZulu- Natal 31 350 24 114 23 714 28 882Limpopo 9 644 8 634 10 542 10 386Mpumalanga 12 620 9 613 11 489 11 867North West 6 684 4 975 5 696 7 185Northern Cape 4 882 3 389 3 897 4 206Western Cape 33 696 25 877 25 966 21 137Total 177 968 130 159 138 913 141 474Source: UIF data, 2011/12••Table 16 shows the number of ordinary unemployment insurance claims approved by province from September2009 to March 2012. The number of approved claims have declined from the 177 968 in September 2009 to130 159 in September 2010, although it increased in 2011 and also in March 2012. A decreased of 21% wasrecorded between September 2009 and September 2011• • By province, Gauteng, KwaZulu-Natal and Western Cape remained the three provinces where most of theclaims are received and approved. In general, all claims should be processed within three months and the UIFhas set the target of more than 90% of claims received to be approved and paid within 90 days31


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Figure 8: Trends in the number of job vacancies processed25 00020 00021 213Number15 00010 00011 40414 69213 0475 0000Jul-Sep2009Jul-Sep2010QuartersJul-Sep2011Jan-Mar2012Source: Department of Labour, Job Opportunity Index, 2011/12• • Figure 8 shows that the number of advertised vacancies was highest in July to September of 2010 when21 213 vacancies were advertised in one quarter. This was due to the high demand for police officers and otheradministrative workers by Government Departments and municipalities. The number of advertised vacanciesbegan to decline in the same quarter in 2011 until March 2012. This indicated that the South African labourmarket is not totally contracted but it does offer opportunities to those individuals who meet the skillsrequested by companies.33


Annual Labour Market Bulletin > South African labour market in particular amongst youth 2012Figure 9: Advertised vacancies by occupational category100%90%80%70%Number of vacancies60%50%40%30%20%10%0%Jul -Sep 2009 Jul -Sep 2010 Jul -Sep 2011 Jan-Mar 2012Elementary workers 126 174 275 379Machinery operators and drivers 115 218 394 330Sales workers 687 906 363 591Clerical and administrative workers 1 592 1 776 2 527 1 481Community and personal serviceworkers467 5 462 781 1 021Technicians and trade workers 822 1 296 1 635 1 833Professionals 4 625 7 459 5 170 3 889Managers 2 970 3 922 3 547 3 523Source: Department of Labour, Job Opportunity Index, 2011/12••According to Figure 9 the professionals were in demand in the labour market, followed by managers andclerical and administrative workers in the three-year period and this was the same in the first quarter of 2012.As said before, vacancies advertised in newspapers, in particular in the Sunday Times and City Press are skewedtowards the managers and professionals hence the high number of vacancies recorded in these occupations.There was also an increase in the demand of elementary workers and machine operators and drivers over thesame period, due to the demand for cleaners, security officers, drivers and forklift drivers• • The demand for IT professionals, medical professionals and engineers contributed to the large number ofvacancies in the professional occupation group while the demand for general managers, project and financemanagers contributed to the large number of vacancies advertised in the managerial occupation group usingthe sub-unit groups analysis34

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