The finance sector created nearly 250,000 jobs in the third quarter of 2023, offsetting thousands of job losses in the manufacturing and mining sectors, further cementing the structural shift to a service-orientated economy.
SA’s mining industry has endured a torrid year amid many headwinds, most notably a plunge in commodity prices, an inefficient rail network that has curtailed exports and rolling power cuts.
According to the quarterly labour force survey released on Tuesday, the mining sector shed 35,000 jobs in the third quarter, with more job losses expected, particularly in the platinum sector.
Sibanye-Stillwater in October said that it may retrench up to 8.6% of the workforce at its main platinum group metals (PGM) operations in SA, laying bare the crippling impact of falling commodity prices over the past 18 months. Sibanye is one of the world’s biggest PGM producers, along with Anglo American Platinum, Impala Platinum (Implats) and Northam.
Implats last week said it has started a targeted voluntary separation process with employees.
Coal mining houses have also been letting workers go.
Business Day reported on Monday that the World Bank has forecast that coal prices will fall 26% in 2024 and 15% in 2025, putting more jobs in the sector on the line.
The mining industry provides more than 400,000 people with formal employment, according to data from Stats SA, and it provides the fiscus with critical income in the form of corporate taxes, mineral royalties and individual tax from employees.
The energy-intensive manufacturing sector has not fared any better, shedding 50,000 jobs quarter on quarter and an alarming 122,000 year on year in the quarter under review.
Nedbank’s economic unit said that obstacles to faster economic growth remain considerable and that while electricity supply improved over the past three months, rail and port bottlenecks worsened, weighing on domestic trade, mining and manufacturing.
“Job losses in mining and manufacturing reflect the sharp deterioration in these sectors’ performance amid the drag stemming from weaker global demand, lower commodity prices, limited electricity supply and worsening logistical challenges,” Nedbank economists said in a note to clients.
Private firms are “increasingly forced to operate in failing municipalities where the quality of public services [is] rapidly deteriorating, leaving the private sector with little choice but to seek alternatives ... this vicious spiral is already playing out in mining and manufacturing — the two sectors most exposed to the country’s infrastructural constraints and inefficiencies”.
SA’s financial services sector, regarded as one of the world’s best, created 235,000 jobs in the third quarter, contributing handsomely to reducing the overall official unemployment rate to 31.9% from 32.6%.
The third-quarter unemployment print marked the eighth consecutive quarter in which the jobless rate declined — with 2.4-million jobs added over the period, a rare feat for SA’s moribund economy. Another sector that added jobs in the quarter under review, taking the jobless rate to pre-Covid levels, was community and social services (which includes the government), which added just fewer than 120,000 jobs.
Thanda Sithole, FNB senior economist, said that employment by private households has not recovered, underscoring the cost-of-living pressures.
“The community and social services, financial intermediation, insurance, real estate and business services, as well as the wholesale and retail trade, motor trade [and] hotels and restaurants sectors have largely underpinned the cumulative net jobs gains over this period,” said Sithole.
“While uncertainty prevails, the projected economic recovery and the reforms under way should further support the labour market over time.” There was also movement in the right direction in reducing youth unemployment, often described as a ticking time bomb.
Survey figures show that the youth jobless rate, which measures jobseekers from 15 to 24 years old, dropped to 58% in the quarter — a one-year low — but that is still among the world’s highest.
Public debt
The expanded definition of unemployment, which includes those who have stopped seeking work, fell to 41.2% from 42.1%.
Nedbank warned that the rapidly rising public debt burden will hurt the labour market.
The debt has prompted the National Treasury to propose expenditure cuts, including more subdued capital spending and restrictions on new hires.
“Against this challenging backdrop, employment growth is likely to stall. Meanwhile, the labour force will continue to expand given large pools of new entrants, the unemployed and discouraged workers,” said Nedbank economists.
“Therefore, the unemployment rate is likely to remain structurally high over the medium term.
“A fast reduction in the unemployment rate can only be achieved through robust economic growth, which ultimately requires faster implementation of critical structural reforms.”
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