While no significant changes in all kinds of jobs – formal, informal, permanent and temporary – were seen during October, South Africa’s labour productivity fell to its lowest level in 40 years.

Adcorp’s monthly Employment Index for October 2011, released in Johannesburg this morning, reveals that throughout 2011 labour productivity growth has been negative, with an all time low reached last month.
Labour productivity is a leading indicator of job creation.

Meanwhile, this month’s Index also shows that employment dropped slightly in the mining (-7.8%), construction (-7.0%) and manufacturing (-4.5%) sectors on an annualized basis. Adcorp labour market analyst Loane Sharp says these losses were offset by job increases in wholesale and retail trade (+4.4%) and financial services (+3.0%).

Reflecting good underlying conditions in the consumer sectors, employment of clerks (+3.3%) and service workers (+2.7%) grew steadily, as did domestic work (+5.8%).
“Interestingly,” says Sharp, “for the first time this year, during October government job creation was essentially static.”

The statistics presented in the human capital management group’s Index this month show that South Africa has exhibited negative labour ‘value-added’ and the lowest level of labour productivity since the early 1970s.
Says Sharp: “This negative trend in labour productivity suggests that adding more workers does not necessarily translate into material increases in business output.”

According to Adcorp, one of the problems with the assessment of labour productivity in South Africa, is that it is measured according to ‘output per worker’ thus attributing all output to workers. He says a far more accurate picture of labour’s productivity would emerge if factors like cap ital equipment, technology, land, and other production factors are considered.

In 2011, South African labour productivity growth has been negative (-1.0%). This may well explain why, when real GDP rose by 6.6% after the 2008/9 global financial crisis, employment rose a meagre 2.6%. While GDP figures for the third quarter of 2011 are not yet available, we expect them to confirm the worrying declining labour productivity growth trend in this country.

Sharp insists that labour productivity remains a critical indicator of employment. When adding workers yields greater output (i.e. when labour’s value-added is positive), employers have an incentive to employ more workers.”

Adcorp does not expect a sustained employment rise until at least the second half of next year.

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