Employment in the formal non-agricultural sectors of the economy, as shown by the Quarterly Employment Survey, has declined by 0.1% q/q – a drop of 9 000 jobs between 4Q20 and 1Q21 (a fall of 6 000 jobs when comparing to the revised 4Q20 estimate). Compared to the start of 2020, employment losses still amount to 552 000, which is a 5.4% y/y decline.
Job losses were recorded in the trade (-40 000 q/q), business services (-19 000), construction (-5 000) and electricity (-1 000) sectors. While employment increases were recorded in community services (47 000), mining (5 000) and manufacturing (4 000). Transport sector employment is broadly unchanged. Full-time employment continues to decline, recording -0.7% q/q and -6.5% y/y, driven by declines in trade (-28 000), community services (-22 000), and business services (-15 000). Part-time employment is up 5.3% q/q and 4.6% y/y, led by community services (69 000).
After a gradual improvement in compensation of employees towards 4Q20, earnings have declined 3.6% q/q and remain 1.9% below the 1Q20 level. Only a few sectors have higher basic salary/wage payments; mining (5.2% y/y), electricity 1.7%) and community services (1.2%). Average monthly earnings (including overtime and bonuses) are up 3.2% y/y; while basic earnings are down 2.9% y/y, overtime and bonuses have risen by 8.9% y/y (down 25% after year end and festive season).
Sectoral analysis
Job gains in the trade sector have slowed, led by retail trade (-27 000 q/q) as well as restaurants and hotels (-13 000). Although transport employment is roughly unchanged from 4Q20, gains have been posted in air transport as airlines such as SAA have prepared for an increase in operations in line with improved mobility. With the current adjusted level 4 lockdown restrictions, employment in these sectors remains vulnerable, given that resurgent waves of the virus add pressure to these markets and delay business recovery. On a y/y basis, the tourism-related sectors have bled jobs – hotels and restaurants jobs are 20% lower and air transport jobs are 38% lower.
In the business services sector, financial intermediation has shed 11 000 jobs while legal and bookkeeping services have gained 7 000 jobs, but both are still more than 7% below levels recorded in the first quarter of 2020. The large gains recorded in the community services sector were driven by provincial departments, which added over 58 000 jobs and, as previously noted, most of these jobs are on a part-time basis. Although part-time jobs often lack the benefits of full-time employment, i.e. some financial contracts prefer full-time employment, in the current climate it is better to have a part-time job than none. Manufacturing has also seen job gains, mostly in the production of other foods (2 000), beverages and tobacco (3 000), and parts and accessory transport equipment (2 000). A protracted ban on the sale of alcoholic beverages may make increased production less viable, especially since the industry has been hit by four bans and the entire value chain may struggle to cope with the possibility of further restrictions amid a relatively slow vaccine roll-out.
Outlook
The third wave of Covid-19 infections and the recent adjusted level 4 restrictions pose a risk to output. Even as most of the economy remains open, trading hours and mobility are affected and may constrain confidence in certain industries. Employment gains were already expected to be slow and recent developments may further impede employment prospects. As a result, household spending could also be dampened. A speedy vaccine roll-out is imperative to constraining continuous resurgences of Covid-19 waves and the impact on the economy.
Quarterly Employment Survey commentary from Koketso Mano, FNB Economist.
