Cees Bruggemans: SA job trends worrisome   

by Cees Bruggemans      

The Quarterly Employment survey by Stats SA among major formal businesses and organisations showed a welcome uptick of 42 000 jobs in 4Q2014 to near 9 million. But it was the year-on-year story that was far more worrisome, as it took out seasonality. 

On a year-ago basis, formal SA employment at registered businesses and other organisations DROPPED by 20 000. In the case of the public sector there was still a gain of 59 000, but private formal jobs declined by 79 000, a 1% rate of decline.

This is worrisome as the public sector has by now run out of fiscal runway. Years immediately ahead will likely see less generous hiring. The private sector rate of decline reflects a very slow growth environment and a focus on cost control, especially the wage bill, typical of constrained circumstance.

Average monthly salary gains by the deployed formal labour force, after including bonuses and overtime, still increased by 6.9% in late 2014.

But when you deduct the overall job loss of 0.2%, you are left with 6.7%. When considering core CPI inflation is 5.8% (on which overall CPI inflation is likely to converge later this year as the oil windfall is left behind), that leaves real income gains of less than 1%, thin gruel indeed to drive the consumption economy.

It suggests high wage demands by unions don't necessarily change the overall wage bill picture much, as businesses will make adjustments in labour force numbers. The inflationary impact of any high wage demands for similar reasons may fail to connect particularly strongly, except perhaps industry specific in some instances.

Both job data and real income data reflect a very slow economy of barely 1.5% growth momentum. That won't change quickly on current trends.