A new index, released on Tuesday by trade union Solidarity and market strategists ETM Analytics, has revealed prolonged job and wage insecurity hanging over South Africa’s labour market since the 2009 recession.

The Solidarity-ETM Labour Market Index (LMI) found that job security remained weak, labour affordability remained in a seven-year slump and business cycles indicated the nation remained prone to recessionary risks.

The LMI – a measure of job and wage security in the South African labour market – had increased to 46.1 during the fourth quarter of 2013 from 42.8 during the third quarter, said ETM Analytics head strategist Russell Lamberti, adding that a level of 50 was the threshold between rising and falling security.

However, the index had remained in negative territory, registering below 50 every quarter surveyed, barring the second quarter of 2011, which Lamberti said indicated a drawn out period of job and wage insecurity, stagnant-to-rising wages and retrenchments in some sectors.

“It [the index] has averaged 44.4 since the first quarter [in] 2009 – the middle of the global financial crisis and the start of South Africa's 2009 recession.

“We are not in a healthy phase, the economy is in a tough space, job creation is not particularly strong and we are experiencing moderate deterioration in job security and affordability, ” he explained.

Lamberti suggested that the ideal barometer would be between 50 and 60.

The LMI, an equally weighted combination of the Labour Affordability Index, the Solidarity Employee Confidence Index and the ETM Business Cycle Index, would be incorporated into future editions of the quarterly South African Labour Market Report.

Solidarity senior economics researcher Piet le Roux said the new index aimed to shed new insight into South Africa’s labour environment.

The South African Labour Market Report examined Solidarity’s Employee Confidence Index, a quarterly member survey, which showed a recovery in perceived employee confidence from 40.8 during the third quarter of 2013 to just below neutral at 48.9 during the quarter under review.

“Of those surveyed in the third quarter, 51% reported moderate to high job security, while 27% said they felt their jobs were more secure than the previous quarter. In the fourth quarter, those increased to 58% and 30% respectively,” Lamberti explained.

However, he said despite the positive uptick, the index remained in negative territory.

Lamberti pointed out that the Labour Affordability Index, which was a “macroeconomic measure” of a company’s capacity to add staff or hike wages, “remains in a choppy but sideways trend below 50 and shows that the space for new hiring and wage increases relative to economic output remains weak”.

Since the financial meltdown, the index experienced a brief uplift in labour affordability before continuing its erosion over the past seven years. During the fourth quarter of the year, labour affordability remained static at 46.6.

Lamberti described this as “quite concerning”, noting that it seemed to no longer be a cyclical problem, but was emerging as a long-term challenge.

Meanwhile, the ETM Business Cycle Index, at 42.8 during the quarter under review, remained in a downward trajectory, with the South African Labour Market Report noting that the South African economy “is in a downturn period of weak economic growth and business activity”, with recessionary triggers below the surface.

Lamberti indicated that South Africa stabilised, rather than recovered, after the recession and that new job opportunities were likely to remain relatively scarce and business expansion plans generally limited.