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THE CONTEXT: Extraordinarily low levels of employment
ОглавлениеEffective strategies to address the job losses resulting from the economic downturn in 2008/9 must be rooted in a broader understanding of the high levels of joblessness that South Africa inherited from apartheid. Unusually high unemployment rates by world standards go hand in hand with low pay for many of those who do find work.
The most common figure used to track joblessness, the unemployment rate, reports the share of working age people who are currently actively looking for income-generating employment as a percentage of both workseekers and the employed. However, where unemployment proves persistently high, as in South Africa, that may understate the actual need for paid employment since many people simply stop looking for work. This section therefore starts by analysing the share of employed people as a percentage of working age adults – which the International Labour Organisation (ILO) calls the employment ratio and Statistics South Africa the absorption rate – which is a more objective indicator of the need for employment.
In the mid-2000s, the employment ratio in South Africa was far lower than the international norm. As the following chart shows, less than half of South African adults had some kind of income-generating employment, compared to two thirds for the world as a whole.
Table 6: The employment ratio in South Africa compared to the international norm.
Source: Employment ratio for South Africa calculated from data on employment status in, Statistics South Africa, Labour Force Surveys and Quarterly Labour Force Surveys for the relevant periods. International norm from ILO, ‘3. Employment Indicators (KILM 2–7)’, in Key Indicators of the Labour Market. Sixth Edition manuscript. 2009. Downloaded from www.ilo.org in September 2009. No page numbers.
The ILO reported that South Africa ranked among the ten countries in the world with the worst employment ratios. Half of these ten countries were in the Middle East and North Africa, where women were effectively excluded from the labour market. The other countries with employment ratios similar to South Africa were Armenia, Macedonia, Guadeloupe and Puerto Rico (ILO 2009, Section 3, KILM 2).
As table 6 shows, the employment ratio in South Africa improved modestly through the mid-2000s, as economic expansion was associated with a relatively rapid rise in employment. Data before the introduction of the Labour Force Survey4 (replaced by the Quarterly Labour Force Survey in 2008) are unreliable, so we can only analyse trends from 2002. The downturn in 2008/9 returned the employment ratio to levels last seen in 2004.
The employment ratio reflected inequalities and economic marginalisation associated with race and gender, as the following table shows. In the third quarter of 2009, only 33 per cent of African women had income-generating employment of any kind, compared to 44 per cent of African men and 58 per cent of people in other groups. Moreover, only one in five African women had formal non-agricultural employment, compared to almost a third of African men and half of other people.
Table 7: Employment status by race and gender, third quarter 2009 (figures in parentheses are the employment ratios)
Source: Calculated from data on population group, gender and employment status in Statistics South Africa. Quarterly Labour Force Survey, Third Quarter 2009. Database downloaded from www.statssa.gov.za in December 2009.
Statistics South Africa publishes two figures for the unemployment rate. The ‘narrow’ or ‘official’ unemployment rate counts as unemployed only those workers who say they have actively looked for work over the past week. The ‘broad’ unemployment rate includes people who want income-generating employment but are too discouraged to look for it. As table 8 shows, both the broad and narrow unemployment rates declined through the boom years of the mid-2000s, but increased in 2008/9 as employment levels dropped. The broader rate jumped from 34.2 per cent in the fourth quarter of 2008 to 40.1 per cent in the third quarter of 2009, while the narrow rate climbed from 22.3 per cent to 24,5 per cent. The fourth quarter of 2009 saw only modest improvements.
Table 8: The unemployment rate and the employment ratio, September 2002 to fourth quarter 2009.
Source: Calculated from data on employment status in, Statistics South Africa, Labour Force Surveys and Quarterly Labour Force Surveys for the relevant periods.
Table 9: The unemployment rate by age, September 2002, fourth quarter 2008 and third quarter 2009
Source: Calculated from data on employment status and age in Statistics South Africa, Labour Force Survey 2002 and Quarterly Labour Force Survey Fourth Quarter 2008 and Third Quarter 2009. Databases downloaded from www.statssa.gov.za in December 2009.
The unemployment rate is more useful than the employment ratio for analysing joblessness among younger people, since it effectively differentiates between students and those who actually want income-generating work. As the following chart shows, the broad unemployment rate for those aged sixteen to twenty-nine dropped from 48 per cent in September 2002 to 37 per cent in the fourth quarter of 2008, but rose to 39 per cent in the third quarter of 2009. The narrow unemployment rate showed similar trends.
Between 2002 and 2008, 3.3 million paid employment opportunities emerged outside mining and agriculture, which shrank. Most of the expansion took place in the tertiary sector. Public and private services, construction and retail together accounted for 78 per cent. Of these sectors, only retail saw substantial job losses in the downturn from the end of 2008 to the third quarter of 2009.
Table 10: Employment by sector, September 2002, second quarter 2008 and third quarter 2009.
Source: Calculated from data on employment by sector in Statistics South Africa, Labour Force Survey 2002 and Quarterly Labour Force Survey Third Quarter 2008 and Third Quarter 2009. Databases downloaded from www.statssa.gov.za in December 2009.
Most of the employment creation in the mid-2000s also occurred in the formal sector. As a result, informal employment dropped from 18 per cent in 2002 to 16 per cent in the third quarter of 2008, and to 15 per cent in the third quarter of 2009.
The low employment ratio went hand in hand with very low pay in some major sectors, notably agriculture, domestic work, parts of business services and the informal sector. As Table 11 shows, in the third quarter of 2008, some 26 per cent of all workers earned under R1 000 a month.
Table 11: Share of workers earning under R1 000 a month by sector in third quarter 2008
Source: Calculated from data on income groups by sector in Statistics South Africa, Quarterly Labour Force Survey, third quarter 2008. Database downloaded from www.statssa.gov.za in December 2009.
The share of working people earning under R1 000 a month had dropped from almost 40 per cent in 2002, a reflecting real wage growth as well as inflation, in large part due to the introduction of minimum wages in agriculture and domestic work at around R1 000 a month in the mid-2000s. Unfortunately, Statistics South Africa stopped publishing wage data in the Quarterly Labour Force Survey after the third quarter of 2008, so the impact of the crisis on incomes cannot be tracked.
The high levels of joblessness and low incomes for many of those who found work meant that the sharp drop in employment from the end of 2008 had a particularly strong social impact. A major concern was that the bulk of employment loss occurred amongst the working poor, who had the fewest buffers against income loss. Moreover, as discussed below, most of the government’s response to the crisis aimed at protecting formal manufacturing and mining employment, with relatively little to assist those in more marginal sectors.