New South African Review 1 - Anthony Butler

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only 30 per cent of total employment. That meant job losses in these industries were proportionately far larger than in the rest of the economy, with a decline of more than 10 per cent overall. It appears that many formal employers cut hours and incomes from the start of the recession, although most avoided retrenchments at least until the third quarter of 2009. That, in turn, reduced demand for goods and services from (largely self-employed) informal and domestic workers.

      Within the formal sector, job losses affected lower level, low-wage workers most heavily, further adding to the burdens on poor households and communities. As the following table shows, production and elementary workers lost around 10 per cent of all employment, with the steepest decline in the third quarter of 2009.

      Table 3: Percentage change in formal employment by occupation, fourth quarter 2008 to third quarter 2009

      Source: Calculated from series on occupations in Statistics South Africa. Quarterly Labour Force Survey from fourth quarter 2008 to third quarter 2009. Database in SPSS format. Downloaded from www.statssa.gov.za in November 2009.

      The crisis had a differentiated impact on the provinces. Gauteng bore the brunt of job losses, accounting for almost half of the decline although it contributed just a third of total employment (with around a fifth of the national population). By contrast, the Western Cape saw relatively low employment losses, especially in manufacturing. This trend presumably arose because manufacturing in Gauteng was largely linked to the mining value chain – refining and smelting downstream, and production of structural steel products and capital goods upstream – while the Western Cape housed light industry and petroleum refineries.

      The overall pattern of job losses aggravated racial inequalities. From the fourth quarter of 2008 to the third quarter of 2009, Africans lost 9 per cent of all employment opportunities, while other groups3 lost 4 per cent.

      In part, this trend reflected the relatively high level of African employment in the informal sector and agriculture, which saw particularly sharp employment losses. Only 63 per cent of all employed Africans had formal jobs in the third quarter of 2009, compared to 86 per cent of other groups. Even within formal employment, however, Africans lost 6 per cent of jobs, twice the percentage job losses for other workers. That situation arose for two reasons: on the one hand, production and elementary workers were predominantly African and suffered the largest employment falls, while on the other, more than two thirds of employed people in the Western Cape, which came off comparatively lightly, were non-African.

      Table 4: Formal employment loss by race and occupation, fourth quarter 2008 to third quarter 2009

      Source: Calculated from series on occupations in Statistics South Africa. Quarterly Labour Force Survey from fourth quarter 2008 to third quarter 2009. Database in SPSS format. Downloaded from www.statssa.gov.za in November 2009.

      Women generally fared better than men in terms of employment losses. Some 3 per cent of women lost paid positions between the fourth quarter of 2008 and the third quarter of 2009, compared to 6 per cent for men.

      This discrepancy did little to moderate the generally disadvantaged position of black women in the labour market. In the third quarter of 2009, women comprised just 45 per cent of all paid employment, making up only 41 per cent of formal workers and 34 per cent of agricultural workers, but 79 per cent of domestic and 46 per cent of informal workers. Domestic work accounted for 20 per cent of employment for African women.

      In the current crisis, the heavy job losses in domestic work had a huge impact especially on younger African women, but they were offset by lower employment losses for women than for men in other sectors. That is partially explained by women’s historically weak representation in mining, heavy manufacturing and construction, which were hard hit, and their strong participation in the public services, which did not shed jobs.

      Younger workers suffered particularly heavy employment losses. That trend harboured significant risks for social cohesion and for longer-term social and economic development. As table 5 shows, despite job gains in the final quarter, workers under twenty-five saw one employment opportunity in eight disappear in 2009. That compared to around one in twenty jobs lost for older workers.

      Source: Calculated from Statistics South Africa. Quarterly Labour Force Survey. Relevant quarters.

      Heavy job losses among younger workers reflected various factors: the relatively low levels of youth employment in the public sector, which did not lose any jobs; a very sharp drop in paid domestic jobs for workers under thirty; and the general principle in the formal sector of retrenching workers with the shortest service first.

      In short, the job losses that resulted from the global economic downturn from the end of 2008 to the end of 2009 generally aggravated the deep inequalities that already characterised the South African economy. They had the deepest impact on low-income workers, especially in marginalised sectors, which in turn meant African communities suffered the harshest impact. In addition, the very high levels of job loss amongst young workers had particularly negative implications for social cohesion and long-term development.

      THE CONTEXT: Extraordinarily low levels of employment

      Effective strategies to address the job losses resulting from the economic downturn in 2008/9 must be rooted in a broader understanding of the high levels of joblessness that South Africa inherited from apartheid. Unusually high unemployment rates by world standards go hand in hand with low pay for many of those who do find work.

      The most common figure used to track joblessness, the unemployment rate, reports the share of working age people who are currently actively looking for income-generating employment as a percentage of both workseekers and the employed. However, where unemployment proves persistently high, as in South Africa, that may understate the actual need for paid employment since many people simply stop looking for work. This section therefore starts by analysing the share of employed people as a percentage of working age adults – which the International Labour Organisation (ILO) calls the employment ratio and Statistics South Africa the absorption rate – which is a more objective indicator of the need for employment.

      In the mid-2000s, the employment ratio in South Africa was far lower than the international norm. As the following chart shows, less than half of South African adults had some kind of income-generating employment, compared to two thirds for the world as a whole.

      Source: Employment ratio for South Africa calculated from data on employment status in, Statistics South Africa, Labour Force Surveys and Quarterly Labour Force Surveys for the relevant periods. International norm from ILO, ‘3. Employment Indicators (KILM 2–7)’, in Key Indicators of the Labour Market. Sixth Edition manuscript. 2009. Downloaded from www.ilo.org in September 2009. No page numbers.

      The ILO reported that South Africa ranked among the ten countries in the world with the worst employment ratios. Half of these ten countries were in the Middle East and North Africa, where women were effectively excluded from the labour market. The other countries with employment ratios similar to South Africa were Armenia, Macedonia, Guadeloupe and Puerto Rico (ILO 2009, Section 3, KILM 2).

      As table

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