Formal jobs figures rose at the end of 2019 — before Covid-19

Annual growth in formal sector jobs rose marginally in the final quarter of 2019, driven by growth in community services and trade, Stats SA data revealed on Tuesday, 

But the picture is likely to worsen in the year ahead, said economists, as SA faces the consequences of a 21-day lockdown needed to slow the spread of the coronavirus.

The crisis sparked by the virus is now expected to result in a contraction in growth for 2020, with a number of economists forecasting that it could surpass the -1.5% level experienced during the 2009 global financial crisis.

During the fourth quarter of 2019, SA’s economy contracted by 1.4%, slipping into its second recession in as many years, leaving it in a vulnerable position even before the Covid-19 pandemic disrupted trade and hit economies around the world.

Jobs rose by 18,000, or just 0.2%, on an annual basis, down from the revised 1% recorded in the previous quarter. This is the lowest level measured in a fourth quarter since 2009, according to Stats SA. Three sectors — community services, trade, and business services — saw an increase in jobs numbers, while the remaining five sectors recorded losses.

Total employment increased by 16,000 or 0.2% quarter on quarter, Stats SA said. This followed a quarterly decline of a revised 0.2% in the third quarter. The trade sector led the jobs increases on a quarterly basis, thanks to festive season shopping and events such as Black Friday typically associated with increased temporary jobs in the retail sector.

Both the quarterly and annual figures showed sharp increases in part-time employment. Part-time jobs account for 90% of all formal sector work, according to Stats SA.

On an annual basis gross earnings rose by R8bn or 5.2%, including both base salaries and bonuses. Though the growth was minimal it was “a bit of positive news” amid the current economic gloom said PwC economist Christie Viljoen.

Community services — which include the government — and the trade sector, buoyed by festive season shopping, helped shore up the numbers, even as other sectors all saw jobs decline, he said.

But jobs numbers are likely to decline, particularly the in the second quarter of this year, when the impacts of the 21-day lockdown begins to be measured, Viljoen said

“There will be people after [the lockdown], who will not be able to return to their jobs,” he said, adding that many small business will not re-open, while larger companies are likely to reduce their staff numbers due to financial pressure.

According to Viljoen, the three-week lockdown amounts to roughly 6% of total workdays in the year. “That is going to be painful for small businesses in terms of sustainability, but also for big companies in terms of revenue. That is the big pressure on the second quarter.” 

The outlook on global and domestic economic growth has deteriorated materially since the outbreak of Covid-19, said FNB’s Siphamandla Mkhwanazi in a statement.

“Supply chain disruptions and the demand-dampening effect of containment measures will weigh heavily on output, asset prices, sentiment and consumer spending,” he said. “As a result, we expect significant job losses in 2020, which bodes ill for household income and the ability to spend.”

donnellyl@businesslive.co.za