Employment gains continue in 4th quarter
The South African economy continued its impressive job creation performance in the 4th quarter of 2022, adding another 169,000 new jobs.
Although the latest quarterly gain was more muted than in the first three quarters of the year, formal sector employment managed to record an increase of 143,000, with a solid increase in employment by private households of 52,000.
For the year as a whole, the number of people employed in the formal and informal sectors (including agriculture), increased by almost 1.4 million, taking the total number of employed persons to almost 16 million.
Following the dramatic decline in jobs during the worst of the Covid-pandemic, last year’s rebound of employment creation has been most welcome and has also played a major role in the huge fiscal revenue overrun announced by Finance Minister Enoch Godongwana with the recent tabling of the 2023/24 national budget.
When new jobs are created, the South African Revenue Service (SARS) laughs all the way to the bank, with virtually every source of taxation revenue ultimately benefiting from the increase in labour remuneration. This fortuitous cycle (from a SARS perspective) starts with personal income tax, followed quite closely by value added tax (as spending takes place) and, to a varying extent, also the other indirect taxes, such as excise duties and the fuel levy.
The increase in employment in construction during 2022 is particularly encouraging, as this sector is the most labour intensive of all and has been battling to retain its workforce in recent years. Unfortunately, however, last year’s employment growth in construction remained muted, due mainly to the decline in capital formation by the public sector (especially state-owned enterprises).
Energy drive will boost job creation
Cynics that are predicting zero economic growth for South Africa in 2023 may yet be proven wrong as a result of the current upward trajectory of employment creation, as well as the inevitable investment surge that will accompany the country’s mission to restore energy security.
In addition to handsome incentives for the installation of renewable energy that were announced in the budget, South Africa’s hydrogen corridor, which has been declared a strategic integrated project by government, is expected to create 14 000 jobs over the medium term. An announcement to this effect was made by Natascha Viljoen, CEO of Anglo American Platinum during the company’s presentation of its financial results for 2022.
The global drive towards developing hydrogen as a future source of clean energy is dependent on platinum group metals (PGMs), which South Africa is blessed to possess in abundance.
It is clear from the data in the table that the record sales performance in 2022 of sectors such as wholesale trade, motor trade and manufacturing, is also reflected in higher levels of job creation in these sectors.
Currency weakness may play a part in further labour market expansion during the first quarter of 2023, due to the improvement of the competitiveness of local manufacturers, combined with a further recovery of tourism.