Workers come back more vulnerable

First Published in Business Day on   June 30th, 2022   |   by   Isaah Mhlanga

Workers come back more vulnerable

There has been growth of 42,000 jobs in the first quarter but 41,000 of these are part-time

The quarterly employment statistics, an enterprise survey of formal employment released by Stats SA, revealed what we have always feared about the labour market — a slow recovery in jobs growth continues, but a rising number of those coming back into the labour market are more vulnerable than before the pandemic.

The economy added 42,000 jobs during the first quarter of 2022 compared to the fourth quarter of 2021. This reflects the net effects of employment growth in community services (69,000), manufacturing (8,000) and mining (2,000) and declines in trade (-18,000), construction (-9,000), business services (-8,000) and transport (-2,000).

Beneath the headline numbers are two concerning dynamics of the jobs market.

First, the lion’s share of the net addition in jobs (41,000 of the 42,000) are part-time, which means that while the recovery in employment is positive, the workers back in the labour market are more vulnerable.

Second, the increase in employment was driven by the national government (101,278), which increases fiscal risks in the event of poor tax revenue performance in future, combined with the difficulty of reducing employment in the public sector.

The outcome reveals a lingering uncertainty in the economic outlook faced by the private sector, both from the global environment and domestic policy, which makes companies hesitant to add permanent workers so they instead opt to increase part-time jobs.

The size of the economy had recovered to pre-Covid levels by the end of the first quarter of 2022, thanks to rising commodity prices that lifted economic growth more than expected. However, the next two years’ outlook is uncertain due to increasing risks of a downturn in the advanced economies. The risk of a recession in the US continues to rise, with the Federal Reserve chair uncertain whether it can be avoided given the need for aggressive interest rate hikes to cool down inflation.

Europe is already in a downturn as a result of high energy prices and the disruption from the war in Ukraine. By contrast, China is stimulating its economy but is unlikely to fully offset the slowdown in the US and Europe.

This implies that global demand for commodities is not likely to come to SA’s rescue over the next two years as it did since the recovery from the Covid-19-induced recession started, a point well made by fellow columnist Mamokete Lijane (“Commodity prices and earnings growth to decline”, June 29).

Meanwhile, there is so much uncertainty locally. Stage 6 load-shedding made it into the Bloomberg headlines, among other global news outlets, which means foreign investors are incorporating the risk to the economy posed by power cuts and what they mean for returns. That’s not good.

There is still no concrete solution to permanently end load-shedding over the short to medium-term. In the interim, unprotected strikes, intimidation and attacks on workers not participating in the strike continue unchecked. Worse still, the vandalism of energy infrastructure happens in broad daylight as if the law enforcement authorities are helpless.

How this happens and nothing is done about it raises the question of where the economy is going, and whether those now finding refuge in part-time government jobs will ever get secure permanent jobs in the private sector. At the extreme one wonders whether the masses of people without jobs and who have never had jobs in their lives, will ever find employment.

Having low economic growth because of global issues is understandable and excusable. However, failing to do that which is within a country’s ability and mandate is not excusable. The masses of unemployed are being failed by narrow vested interests that are not prepared to make tough political decisions.

Sooner or later something will have to give, and those in the third economy, trapped in government grants and part-time jobs, will find a way to escape. My fear is that when they do it will be uncontrollable, chaotic and destructive. A new economic consensus is urgently required to avoid this. 

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