LABOUR productivity in SA’s formal sector — the country’s biggest employer, with 9.3-million people — is falling while unit labour costs are rising, Reserve Bank data showed on Tuesday.

Several employer organisations have constantly warned that high labour costs and low productivity will negatively affect job creation or even result in job losses.

Labour productivity contracted by 1.2% in the year to the first quarter of 2016, as year-on-year output growth contracted while employment growth accelerated only marginally, the Bank said in its quarterly bulletin on Tuesday.

Owing to a marginal year-on-year acceleration in total remuneration growth in the first quarter of 2016, coupled with a year-on-year output contraction, growth in nominal unit labour costs quickened from 6.1% in the fourth quarter of 2015 to 7.3% in the first quarter of 2016, exceeding the upper limit of the inflation target range for a second successive year.

The pace of increase in private-sector nominal remuneration per worker accelerated while the pace of increase in average public-sector salaries and wages per worker decelerated.

Treasury is running tight spending as it aims to bring down the large gap between government spending and revenue.

Growth in average real salaries and wages slowed significantly in the first quarter of 2016 amid a marked acceleration in inflation over the period, the Bank reported.


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