More jobs, but long-term outlook bleak

2010-11-11 00:00

ALTHOUGH the economy’s ability to create jobs will surprise on the upside over the next six to 12 months, South Africa’s long-term employment creation forecast looks decidedly bleak.

This is according to labour market analyst at Adcorp, Loane Sharp, who told The Witness yesterday that stringent labour laws that increase the costs of doing business will continue to hamper job creation.

The latest monthly Adcorp Employment Index for October 2010 showed yesterday that employment numbers accelerated at an annual rate of 2,83%.

Adcorp said that the number of permanent workers rose by 1,32% while the number of temporary workers grew by 6,47%.

Wholesale and retail trade are performing well as these sectors are anticipating a better Christmas/festive period.

Employment in the mining sector ticked up as a result of the recent commodity price upswing.

However, manufacturing and financial services continued to disappoint.

“We were looking for a turnaround in financial services,” said Sharpe.

“However, consumers are still debt-strapped.

“There is not a lot of activity and scope for growth in financial services. Corporate credit is growing very slowly,” Sharpe said.

He said the economy will create jobs in the next 12 months.

“The economic situation is better than many people think it is.

“Money supply has accelerated sharply in the past nine months,” Sharpe added.

However, he warned that unemployment, which is the main risk South Africa faces according to foreign investors and credit rating agencies, will soar over the next nine years.

Adcorp has predicted that the number of unemployed people is expected to increase from 6,2 million (at present, including discouraged work-seekers) to 16,8 million in 2020.

“We have extensive unionisation, as well as an extensive collective bargaining system that drives up wages, without linking it to productivity.

“Labour laws are also problematic. We’ve added 16 new laws over the past 15 years.

“The costs of doing business are far too high and we will not create jobs until we reverse the legislation trend. Unfortunately, employment does not seem to be on the government’s radar, with the exception of Finance Minister Pravin Gordhan,” Sharpe said.

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