The quarterly Solidarity-ETM Labour Market Index (LMI), compiled in collaboration with ETM Analytics says South Africa has reached the lowest point since the 2008/2009 financial crisis. The LMI, an index of employee confidence, labour affordability and the ETM Business Cycle Index, dropped sharply from a downwardly revised 44,6 in Q4 2015 to 38,6 in the first quarter of 2016. In terms of the LMI, 50 is the break-even level between rising and falling job and wage security.
The economic researcher at the Solidarity Research Institute (SRI) Gerhard van Onselen says the decline in the index is an indication of a deteriorating labour environment with slow wage growth, weak net employment and retrenchments in most sectors.
“Given the weakening of the index, the latest weak labour market figures released by Statistics South Africa this week did not come as a surprise,” Van Onselen says.
Van Onselen added that the lower levels of job and wage security in the first quarter of 2016 could probably be attributed to the sharp depreciation of the rand from December to February, the looming threat of a credit rating downgrade, and major political scandals within the context of weak growth, rising costs and overall uncertainty in the business sector.
“Although the first quarter ended slightly better with the rand having recovered somewhat and the Constitutional Court judgment against President Zuma, it seems that the struggling labour market will be suffering from difficult economic conditions for a long time to come.”
