Further rise in jobs during 1st quarter of 2023
More than a quarter of a million new jobs were created during the first three months of the year, despite a rise in the official unemployment rate.
A simple piece of arithmetic explains this apparent paradox, namely the positive difference between the increase in the labour force and the increases in employment. The first quarter of each year sees a large increase of new entrants into the labour force, due to many students and graduates having completed their studies, but this phenomenon fizzles out during the rest of the year.
It is nevertheless encouraging that the total number of employed persons is now more than 2 million higher than in the disastrous second quarter of 2020 (when the Covid lockdowns were at their harshest).
Unfortunately, the job creation momentum stalled during the first half of 2021 and was dealt a harsh blow with the July 2021 unrest, apparently engineered by the so-called “RET faction” of the ANC and mainly limited to KwaZulu/Natal.
Since then, however, the tempo of recovery of the labour market has been impressive, with more than 1.9 million new jobs having been created between the dip in the third quarter of 2021 and the first quarter of 2023. It is the sixth successive quarterly gain of noteworthy proportions. The top five sectors where new jobs have been created on a year-on-year basis, are (number of new jobs in parentheses):
Community & social services (357,000)
Finance, business services & real estate (335,000)
Trade & hospitality (275,000)
The significant gain in employment in the trade sector, which includes tourism-related activity, is especially encouraging and is correlated to the sharp improvement in the recovery rate of tourist arrivals from overseas, namely close to 80%. Another positive development has been the marginal improvement of the share of skilled occupations to a level of 71.5%.
It is also encouraging that the most labour intensive sector of the economy, namely construction, is showing signs of a welcome revival, as activity in the sector is associated with capital formation. This bodes well for the need to expand the country’s future productive capacity and, judging by the increase in jobs in utilities, may be a sign that progress is slowly but surely being made with enhanced spending on infrastructure.
On a regional basis, Gauteng and the Western Cape have been the star performers, due to a combination of demographics (including so-called semigration); activity in the residential property market; a high level of economic diversification; and the recovery of tourism.
Long may the recovery of employment creation continue! This could be facilitated by the current wave of investment in renewable energy, higher exports on the back of vibrant economic growth in China & India and an element of import replacement flowing from currency depreciation.