The latest labour market data released by Statistics SA confirms the resilience of the South African economy, despite slow growth and the highest cost of capital in more than a decade.
During the 2nd quarter of 2023, employment creation continued unabated, with total employment (including the informal sector) rising to within a whisker of the pre-Covid level of 16.4 million people. The increase of 154,000 jobs follows on the 1st quarter employment gain of more than a quarter of a million and is most encouraging against the backdrop of high interest rates and muted economic growth in most of South Africa’s key trading partners.
The tempo of recovery of the labour market would have been even more impressive in the absence of the socio-political unrest that occurred mainly in KwaZulu/Natal during the 2nd quarter of 2021, which caused substantial job losses until well into 2022.
The renewed employment creation in the construction sector is of particular importance, as this signals a measure of progress with the maintenance and expansion of the country’s infrastructure. Capital formation, which is closely aligned to construction activity, possesses the advantage of relatively high economic multiplier effects, which ultimately also leads to higher tax revenues. It is encouraging to note the fact that construction took the honours on a quarter-on-quarter basis, adding more than 100,000 jobs and outperforming the sector that includes all retail and wholesale trade activity.
Cynics that question the new-found upward trajectory of job creation need only look to the sterling performance of South Africa’s exports, as well as the new all-time sales records for manufacturing and wholesale trade and the recovery of tourism to grasp the roots of the higher demand for skills.
Apart from private households, every key source of employment by industry/sector has managed to increase employment over the past 12 months, with the sector including retail & wholesale trade and hospitality leading the pack.
On a regional basis, Gauteng and the Western Cape continue to outperform the rest of the country, with KwaZulu/Natal, the Eastern Cape and Limpopo also making meaningful contributions to new job creation over the past year.
National Treasury will no doubt be quite relieved at the pace of new job creation, as the direct and indirect taxation revenues flowing from the higher levels of labour remuneration should ensure continued fiscal stability, whilst also providing adequate funding for the upgrading of infrastructure.