What to expect from jobs and hiring in South Africa in the next few months: Nedbank

While South Africa’s latest unemployment data has been welcomed after reaching record highs at the start of 2022, the outlook for the job market remains uncertain, says Nedbank.

In a research note on Wednesday (1 June), the bank noted that the economy had started the year positively, with corporate profitability recovering. However, the recovery is now threatened by concerns about global stagflation – including the dilemma of high-interest rates, slow economic growth, and high unemployment.

“Conditions in the sectors that supply the export market are likely to remain subdued as global demand will be restrained by the slowdown in China’s economic growth, the impact of the Russia-Ukraine war, and tighter monetary policy. The sectors focused on local demand are still expected to expand, mainly supported by consumer spending, but the upside will be limited by rising inflation and interest rates.

“This, together with slow structural and policy reforms and power shortages, will weigh on business confidence and the private sector’s willingness to expand capacity, essential for job creation. At the same time, some of the businesses affected by the flood in KZN will take time to return to full operations due to the extent of the structural damages.”

However, the termination of the state of emergency earlier in the year should support the recovery of labour-intensive industries such as hospitality and tourism, the bank said.

“Public sector employment will be restricted by government caps to support necessary fiscal consolidation. The labour market will continue to expand due to new entrants into the labour market and the return of discouraged work-seekers, while employment growth will probably increase at an only moderate pace. As a result, the unemployment rate will remain structurally high in the short term. ”

Statistics South Africa’s latest data, published on Tuesday (31 May) shows a decline in the unemployment rate from a record high of 35.3% in the fourth quarter of last year to 34.5%.

The labour forces expanded by 1.4% in the first quarter of this year as economic activity broadly normalised from the Covid- 19 shock as most of the major lockdown restrictions were removed.

“Companies’ profitability is returning, and they are gradually expanding capacity. At the same time, more people returned to the labour market as improving conditions increased job seekers’ confidence in finding jobs. The number of discouraged work-seekers fell, and the labour force participation rate increased during the quarter,” Nedbank said.

The labour force increased by 310,000, with the number of employed people rising by 370,000, reducing the number of unemployed by 60,000. Both the formal and informal sectors created jobs, with the highest number of jobs (408,000) added in the formal sector. The informal sector added 171,000 jobs.

Jobs ceiling 

The annual numbers showed that the economy has not yet recovered enough to support a significant increase in employment creation, as the unemployment rate was still higher than 32.6% recorded in the first quarter of 2021, Nedbank said.

“The total number of unemployed people remained high, rising by 620,000 from the fourth quarter of 2021, while a total of 81,000 jobs were lost over the same period in 2021. The highest (195,000) jobs lost in the financial sector, while the manufacturing, agricultural and transport industries created a combined 192,000 jobs.”

The performance of the industries was mixed, the bank said.

“The highest number of jobs was created in community and social services (281 000) and manufacturing (263 000). Employment also increased in domestic trade and mining. Employment in the domestic trade sector was mainly lifted by firmer activity in the hotel and tourism industries. Private households lost the highest number of jobs (186 000) over the quarter. Agriculture, construction and finance also reduced workers.”

Read: South Africa’s disposable income squeezed further by latest hikes: FNB

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