The quarterly employment statistics (QES) data released yesterday by Statistics South Africa (Stats SA) runs counter to the government’s economic recovery plan, which needs all productive hands on deck to ensure success, says Steel and Engineering Industries Federation of Southern African (Seifsa) chief economist Michael Ade.
According to the QES data, the broader manufacturing sector, of which the metals and engineering (M&E) sector forms an integral part, lost 8.2% of total employment, comprising an alarming 100 000 jobs in June 2020 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.
Dr Ade said the data showed that the M&E cluster of industries had felt the double whammy of the Covid-19-induced economic lockdown and stagnant economy, as its sub-components had recorded the biggest decrease in job numbers. He said there had also been decreases in employment in the basic metals, fabricated metal products, general machinery and equipment, and transport equipment sub-sectors.
The worrying trend had been compounded by contemporaneous decreases in employment and business activity in important industrial sectors with high interlinkages, such as the mining and construction sectors, which had both recorded job losses of 12 000 employees and 111 000 employees respectively in June 2020 compared with June 2019, he noted.
The decline in job numbers was expected for a plethora of reasons, he added. These included the fact that the GDP figure published earlier last month for the second quarter of 2020 had revealed weaker-than-expected domestic growth relative to quarter one, as local manufacturing production and sales had dipped amid a generally poor business expectation following the Covid-19 storm. He said given the slack in economic activity and poor inventory turnover for businesses in manufacturing, the decrease in employment for the same period was anticipated and highlighted the negative effects of subdued domestic demand conditions on jobs.
Dr Ade said a distortion in supply chains and an increase in operational expenses and intermediate input costs for businesses had made it even more difficult to sustain jobs. As a result, companies were forced to retrench workers and offer voluntary severance packages.