Stats SA announced this week that it will roll out an improved version of the quarterly labour force survey (QLFS). This comes in response to an important critique of the survey suggesting it may not fully reflect informal business activity and could therefore overestimate the rate of unemployment. It will be fascinating to see the results.
The QLFS is not SA’s only employment survey. It is accompanied by its twin, the quarterly employment statistics (QES), which measures employment in the formal, nonagricultural sector. The QLFS is a household survey whereas the QES is a survey of enterprises.
The QLFS asks a sample of households to indicate how many of its members are working and in what sectors, including agriculture, households and informal enterprises. It is well placed to pick up informal activity if the questions are well designed.
The QES asks formal (VAT-registered) businesses to indicate how many people they employ. The QES also reflects the value of wages and salaries paid to employees and the sectoral breakdown of earnings.
The QLFS provides demographic data (employment by age, race, gender) whereas the QES does not. These two surveys should be read together to create a clear picture of movements in the labour market.
Economic commentators tend to comment mostly on the rate of unemployment, which depends on the number of jobs and the size of the workforce. We often fail to notice that the number of formal jobs in SA is actually growing. The difficulty is that the size of the workforce is growing faster. The rate of unemployment has therefore risen even though the number of formal jobs has grown (leaving aside the question whether we are underestimating the number of informal jobs).
Consider the numbers. The QES was first released in 2005 and estimated that there were just more than 7-million formal, nonagricultural jobs. The latest release shows a total of 10.6-million, a significant increase. The difficulty is that the number of work seekers has grown so much faster. It is also true that much of the increase in formal employment was achieved between 2005 and 2010, with a far slower rate of growth since then.
The future rate of unemployment will be influenced by the following:
- Can we grow the formal economy faster? Every percentage point increase in economic growth in SA creates, on average, 125,000 new jobs. This number can be increased if we grow the most labour-absorbing sectors (including services such as tourism and global business services as well as agriculture).
- Are we enabling the growth of informal enterprises, and count them correctly? Much will depend on the removal of red tape and other impediments.
- How many people will be looking for work? This depends on population growth. Average growth for the past decade has been about 1.4% per year, and has been dropping on average since the 1980s. The size of the labour force is clearly stabilising.
Our main objective must be to grow the economy faster than we grow the labour force. But future employment trends depend not only on the quantity of the labour force but also its quality. Young people must be equipped with the right skills to navigate the rapidly changing world of work.
This requires wholesale change to the system of post secondary education, including technical and vocational education training colleges, and sector education & training authorities. Our new higher education minister will have his hands full trying to ensure this system is better able to meet the needs of the labour market.
• Bethlehem is an economic development specialist and partner at Genesis Analytics. She has worked in the forestry, renewable energy, housing and property sectors as well as in local and national government. She writes in her personal capacity.
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