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Huge loss of jobs sets off alarm bells
Huge loss of jobs sets off alarm bells

Huge loss of jobs sets off alarm bells

ECONOMIC NEWS - Jul 29th 2016, 09:14

SA has lost almost 500,000 jobs in the first six months of 2016, raising the alarm about the blood bath that could follow should the country slide into recession. 

The outlook for job creation is bleak for the millions of unemployed, with economic growth forecast at close to zero.

"The employment picture is not looking great. We do not see any significant employment growth this year," FNB economist Mamello Matikinca said.

The economy shed 355,000 jobs in the first quarter. About 129,000 more were lost in the second quarter, leaving the official unemployment rate little changed at 26.6% in the second quarter, Statistics SA’s quarterly labour force survey showed on Thursday.

This meant 5.6-million people were jobless.

The near-500,000 jobs shed in the economy in the first half of 2016 highlights the intense pressure the economy is under, particularly given crimped profitability in most sectors, BNP Paribas Securities economist Jeff Schultz said.

"This is unlikely to sit well with the government and policy makers, particularly on the doorstep of next week’s local government elections," Schultz said.

The expanded unemployment rate, which also takes into account people that have given up actively looking for work, rose slightly to 36.4%. Youth unemployment remained high at 37.5%. About 3.2-million youth aged between 15 and 24 are neither employed nor in education or training.

The latest unemployment numbers reflected the difficult economic situation facing SA, statistician-general Pali Lehohla said.

The jobs numbers suggested that programmes aimed at reducing unemployment were ineffective, partly due to global factors but also to local ones. Local factors that policy makers and analysts have highlighted before as contributing to high unemployment include low levels of education and skills and stringent labour legislation.

The reported drop in the labour participation and absorption rates was a "telling sign" of the high number of discouraged work seekers and companies that were not able to create jobs, Matikinca said. The acceptable average labour absorption rate among most emerging markets was 60% and SA’s was nowhere near that at 42.5%, she said.

The gloomy jobs data called for "bold economic leadership", according to National African Federated Chamber of Commerce and Industry chief economist Landiwe Mahlangu.

"The government needs to ensure that small businesses access finance because they create the jobs. There must also be a clear intention to train students and an opening of the market to private companies," Mahlangu said.

Jobs were lost in the services, agriculture, transport and mining sectors. The loss of jobs in services was partly attributed to the ending of the contracts of people hired by the Electoral Commission of SA to help with registrations for the local government elections.From DFM Publishers (Pty) Ltd 

Read more about: south africa | finance | economy

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