The Quarterly Employment Statistics (QES) data released on June 29 by Statistics South Africa (Stats SA) reflect South Africa’s turbulent path to economic recovery amid the deepening negative impact of Covid-19 restrictions on the economy, the Steel and Engineering Industries Federation of Southern African (Seifsa) says.
According to Stats SA, the total employment rate decreased by 0.1% quarter-on-quarter from more than 9.65-million in the fourth quarter of 2020 to 9.64-million in the first quarter of this year.
This, Seifsa explains, was largely owing to job cuts in industries such as trade, business services, construction and electricity.
However, there were slight increases in employment in several sectors, including mining, with a 1.1% increase and manufacturing, with a 0.4% rise in jobs. Year-on-year, total employment decreased by 552 000, a 5.4% decline compared to the first quarter of 2020.
Within the metals and engineering (M&E) sector, total employment in the 13 subsectors increased by 2 031 jobs between the fourth quarter of 2020 and the first quarter of this year, representing a 0.5% increase.
This, says Seifsa chief economist Chifipa Mhango, reflects marginally improved economic conditions that resulted in better production patterns as lockdown measures were relaxed.
Mhango says, however, that employment trends in the M&E sector remain a concern as, year-on-year, total employment in the M&E sector declined by 8%, from 429 617 in the first quarter of 2020 to 397 586 in the first quarter of this year.
“The M&E sector continues to struggle to hold on to jobs, particularly in key demand driving sectors such as construction,” he notes, adding that this demonstrates a lack of business activity that is needed to stimulate demand for M&E products.
Mhango notes that the contribution of the M&E industry to overall employment in the manufacturing sector remains significant, accounting for a share of 35.9%.
“However, persistent challenges faced by M&E businesses such as high electricity costs and supply disruptions, rising logistics costs and rising imports need to be urgently addressed and should form part of the industrial recovery plan, if employment in the sector is to be stimulated,” he urges.
The recently launched Steel and Fabrication Master Plan should, therefore, be aligned to a short-term delivery deadline in order to ramp up economic activity that will create jobs, he suggests.
Mhango adds that government should also focus on the speedy implementation of reforms across the State-owned enterprises, while also prioritising the implementation of economic revival plans that target increased infrastructure spending.
This he says, will encourage private sector investment.
Mhango notes, however, that he is hopeful of improved economic conditions over the medium term.
“We are beginning to see signs of improvement in overall business confidence levels, and from an M&E perspective, the Purchasing Managers’ Index being in expansionary territory, coupled with an increase in manufacturing output, is encouraging.
“We have high expectations that the South African economy will rebound in 2021 as economic activity gradually returns amid the Covid-19 vaccine roll-out programme,” he says.