Solidarity’s Labour Market Index improves in Q1, but remains below 50
The Solidarity-ETM Labour Market Index (LMI) improved strongly to 47.8 index points in the first quarter of this year, compared with the fourth quarter of 2016’s revised 42.2 index points.
“This is the best level we have seen since the third quarter in 2013 and is indicative of relatively friendlier labour conditions after a lengthy period of declining security,” Solidarity economics researcher Gerhard van Onselen said on Monday.
He added, however, that the index remained below 50, indicating that job and wage security were broadly declining, though at a slower pace.
Van Onselen said an improvement in business cycle indicators had had the biggest positive impact on the LMI for the first quarter.
“We think this improvement is owing to sustained rand strength in 2016 . . . which has led to relatively improved business confidence and has relieved the pressures on import costs.”
Van Onselen pointed out that it remained to be seen whether the improvement in the LMI could be sustained in the following quarters.
“The present dilemma is that cyclical improvements in business cycle indicators in the first quarter, and a decrease in job insecurity, as measured by Solidarity Employee Confidence Index, could not overcome the stagnating conditions of the South African economy to avoid an official recession.
“This leads us to conclude that structural economic weaknesses arising from political uncertainty and a harmful antibusiness policy environment are presently weighing more than cyclical improvements,” he said.
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