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Wed, Nov 30, 2022

Jobs were shed in 2Q22

Employment in the formal non-agricultural sectors of the economy, as shown by the Quarterly Employment Survey, contracted by 119 000 jobs or -1.2% q/q in 2Q22. While this was in line with the GDP contraction of 0.7% in the same quarter, the most job losses were recorded in the community services sector and were most likely linked to temporary census work. Relative to a year ago, employment is still up by 74 000 jobs or 0.7%. Nevertheless, the recovery in employment remains incomplete, with employment still lower by 254 000 or 2.5% compared to 2Q19.

Most job losses were recorded in community services (-100 000 or -3.4% q/q), followed by business services (-15 000 or –0.6%), construction (-13 000 or -2.4%), and manufacturing (-12 000 or -1.0%). Meanwhile, most employment gains were recorded in trade (17 000 or 0.8%), followed by mining (4 000 or 0.9%). Full-time employment declined by 16 000 jobs q/q and by 80 000 or -0.9% y/y. While the job gains in trade and mining were encouragingly full-time jobs, sectors such as business services and construction shed full-time jobs. Part-time employment contracted sharply by 103 000 or 8.4% q/q, led by the community services sector, but still gained 154 000 jobs or 15.9% y/y.

Total gross earnings increased by 0.1% q/q, are 4.5% higher than a year ago and have firmly surpassed 2Q19 levels by 10.7%. Only the electricity sector had lower basic salary/wage payments compared to the previous quarter and year, all other sectors recorded growth. Overtime and bonus payments were 7.1% and 14.3% higher than last year. Overall average monthly earnings (including overtime and bonuses) were up by 3.7% q/q and 4.0% y/y. Inflation-linked wage adjustments should support growth in nominal compensation, but real incomes in some industries are likely to be constrained.

Outlook

Prevailing geopolitical tensions, elevated inflation and tightening global financial conditions are expected to slow the momentum in global growth. This, along with local energy supply constraints, are likely to impede employment prospects. However, the positive employment intentions reported by some industries as well as the ongoing recovery in the services sector will likely to support some employment growth. Ultimately, the employment recovery to pre-pandemic levels may still be protracted in the near-term, lagging the recovery in earnings. In the longer-term, further progress on structural reform and more robust growth in private sector investment should support employment growth.

Selected sector analysis

Job losses in construction and manufacturing corroborate the production contraction recorded in the GDP figures. While manufacturing suffered from disruptions related to the KwaZulu-Natal flooding and intensified load-shedding, the construction sector has continued a long stretch of subdued activity and job shedding has persisted. Losses in community services was led by national government departments, likely reflecting the reduction of part-time jobs related to census work. Meanwhile, employment growth in trade was led by restaurants and hotels (2.5% q/q), highlighting the ongoing recovery in tourism. However, mounting consumer headwinds from higher inflation and interest rates pose a pertinent risk to consumer spending.

Figure 1: Employment
Figure 2: Gross compensation

Source: Stats SA, FNB Economics

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