By Michael Ade
The quarterly employment statistics (QES) data released by Statistics SA runs counter to the government’s economic recovery plan.
According to the QES data, the broader manufacturing sector, of which the metals and engineering sector forms an integral part, lost 8.2% of total employment, comprising an alarming 100 000 jobs in June 2020 as compared with June 2019.
There was also a corresponding decrease on a quarterly basis, with manufacturing employment decreasing by 85 000 jobs or -7.1% in quarter two when compared with quarter one.
Data shows that the metals and engineering cluster of industries had felt the double whammy of the Covid-19-induced economic lockdown and stagnant economy.
Employment in the basic metals, fabricated metal products, general machinery and equipment, and transport equipment sub-sectors decreased.
The decline in job numbers was expected for a plethora of reasons which include the fact that the GDP figure published last month for the second quarter of 2020 revealed weaker-than-expected domestic growth relative to quarter one following Covid-19. Given the slack in economic activity in manufacturing, the decrease in employment for the same period was anticipated.
As a result, companies were forced to retrench workers and offer voluntary severance packages.
The situation is compounded by the persistent lingering of the coronavirus regionally and globally, with extended implications for the intensity of domestic business activity and Greenfield investment decisions by foreign and anchor investors.
The concern is that as companies continue to struggle with cash flow challenges and amid the ongoing Covid-19 pandemic, it is hard to forestall an immediate end to the trend of poor employment numbers in the short term.
The galloping unemployment scourge will, no doubt, have extended socio-economic consequences.
Despite these challenges, there remains a need to continuously improve business expectation and business confidence.
Michael Ade is a Chief economist at the Steel and Engineering Industries Federation of Southern Africa.
The Star