Trade union Solidarity and ETM Analytics’ Labour Market Index (LMI), in the first quarter of this year, halted its continuing improvement since the first quarter of 2016.

The index is an indicator of job and wage security in the South African labour market.

The LMI fell from 50 in the fourth quarter of 2017 to below the neutral level, to 49, in the first quarter of this year, indicating that challenging labour market conditions persisted in the quarter under review.

Solidarity Research Institute economics researcher Gerhard van Onselen said a drop in the index’s business cycle conditions and employee confidence components contributed to the marginal decline.

The component for labour affordability improved from a revised 47 in the fourth quarter of 2017 to 50 in the first quarter of this year and, although this indicates a material improvement in the affordability of labour, it was not enough to raise the index over 50.

Van Onselen said employee confidence, a subcomponent of the LMI, remained elusive in the first quarter, dropping from 50 in the fourth quarter of 2017 to 48 in the quarter under review.

“The first quarter results of the Solidarity member survey showed no positive response in perceptions of job security in response to the political optimism surrounding the Cyril Ramaphosa Presidency.”

“During this time, a vote in Parliament also favoured reviewing options for expropriation of land without compensation, which likely played a role in the decreasing job and wage security in general,” he added.

Van Onselen further noted that it is noteworthy that the LMI is persisting at neutral levels despite relatively stronger global and domestic economic conditions that have been observed since early 2016.

“In essence, the political optimism since the first quarter of this year is still weighed down by damaging policies.”