Absa stated that the country’s job recovery from the Covid-19 pandemic appears to be incomplete, especially when compared to the labour markets of advanced economies.
Absa’s Peter Worthington stated that when looking at the Quarterly Employment Statistics and the Quarterly Labour Force Survey, there seems to be a greater degree of apparent job losses during the pandemic from the Quarterly Labour Force Survey of households and a smaller loss of jobs from the Quarterly Employment Statistics.
Due to the surveys moving from in-person interviews to telephonic interviews Worthington believes that it caused the overestimation of job losses in the pandemic and now it has overestimated the recovery as they have moved back to in-person interviews.
Worthington stated that both surveys have shown that the country is still below pre-pandemic levels of employment. Absa, therefore, thought it was a good time to look at the prospects of employment moving forward, especially as consumers are heavily affected by living costs at the moment.
When looking at the US, Canada and UK economies, they have had strong job recoveries compared to South Africa’s job recovery. For example in the US, there is a larger number of job vacancies than people looking for work which has created a bit of a wage increase because employers have to attract people to join the workforce.
According to Worthington, South Africa is experiencing elasticity of employment with respect to growth which is less than 1%. What that means is that if the economy grows by 1% then employment grows at a fraction of the 1%.
Absa believes that there are a few solutions to address the rise in unemployment, which are to:
- enable GDP to grow at 3.5 to 4% which would be at a pace that would generate enough jobs for those entering the job market,
- make policy changes that would improve the ability of the economy to generate jobs for certain GDP growth by improving training so that individuals are equipped with the necessary skills for the modern economy and available jobs, and
- implement a government-funded employment matching service for workers from the lower end of the income spectrum, which would reduce the cost of looking for a job.
