job opportunities and unemployment report
The Department of Labour has continuously produced this report in order to provide a comprehensive overview of the South African labour market trends, particularly on the demand and supply-side in line with the development trends of the skills in high demand versus the skills supply. This report clearly puts together job vacancy advertised data, e.g., skills required by various industries and profile of the unemployed skills to examine the prospect of matching skills to available job opportunities in the financial year 2017/18.
As it is now known, high rate of unemployment in South Africa as compared to other emerging markets has been a source of great frustration to policymakers. Most of the analysts argued that the slow growth in the real Gross Domestic Product (GDP) which has remained far below 5% since the 2008/9 recession, does not provide many prospects to deal with the triple challenges of unemployment, poverty and inequality in the short-run.
In addition, the South African active labour market policies should reﬂect and come to terms with the fact that the world of work is changing and align their employment creation policies and strategies with business objectives. The Fourth Industrial Revolution (FIR) will probably come with technology changes that will continue to demand new skills. Education institutions must perhaps design a curriculum that encourages critical thinking, creativity as well fast-track the acquisition of digital and Science, Technology, Engineering and mathematics (STEM) skills to match the way people will work and collaborate when the FIR is fully there.
HIGHLIGHTS IN 2017 – 2018
• Regarding the official statistics, the unemployment rate in the country has decreased by 1.0% from 27.7 % in March 2017 to 26.7 % in March 2018 but remains very high
• There were 48 309 job vacancy advertised captured by the department of Labour from both the Info-Desk and the Pnet data sources during 2017/18 financial year. This implies that the South African business cycle and other exogenous factors underline these major changes that are expressed through the company’s desire to recruit new manpower or not for the production of goods and services to sustain the economic growth in the country
• Overall, 39% of the total job advertised vacancies as captured in the Department of Labour database were attractive to those with degree or diploma educational achievements, followed with those with grade 12 at 25 % in the financial year 2017/18
• The number of job vacancy advertised constantly declined in from the frst to the fourth quarter of 2017/18 fnancial year. Sales and marketing managers were occupations in high demand followed by the software developers, shop sales assistants and retail and wholesale trade managers. Software developer’s occupations were demanded in the professional occupational group. It can be seen that information technology creates jobs in the development of websites and apps
• Gauteng had a high demand for almost all occupations followed by the Western Cape province in the following occupations: beauticians, marketing professionals, retail and wholesale trade managers, Software developers etc.
• Out of the total 817 239 work-seekers in the Department of Labour in 2017/18, the Gauteng province had registered the highest at 24.2 % and the lowest was registered in the Northern Cape Province at 3.2 %. it was followed by the KwaZulu-Natal with (16%), Western Cape, Eastern Cape and Free State provinces which registered (11.8%), (11.3%) and (11%) respectively. While the overall placement rate stood at 6.5 % (or 53 601), the provincial placement rates varied over time.
• There were 661 432 ordinary Unemployment Insurance (UI) claims created in 2017/18. The trade industry (44.8%) followed by the agriculture (10.5%), manufacturing (10.5%) and the construction (9.2%) industries constituted approximately 75% of the total ordinary UI claims created in 2017/18 financial year as a result of dismissals or retrenchments etc
• Since 2013, more students enrolled in the Science, Engineering and Technology (SET) field, followed by the business and management and other humanities fields of study. Interestingly, in South Africa the HEMIS database results show that the country had only recorded an average of 20 % of graduates in each year (2014-2016) of student enrollments
• The impact of this trend is that the slow economic growth observed in the performance of the real Gross Domestic Product (GDP) cannot be sustainable in line with the expansion of labour force in the country over time. In other words, the job opportunities are limited and not sufficient to absorb a large number of new entrants in the labour market in particular those who have not worked in the past five years
• In conclusion, the statistics of registered work-seekers are almost 17 times more than the number of job vacancies advertised that were recorded in the Department of Labour. This supports the argument that the labour force is expanding rapidly at the rate probably higher than employment creation in the country
Since the dawn of democracy in 1994, the South African Government has formulated policies such as the Reconstruction and Development Programme (RDP) which was aimed to redress the inherited gross inequalities of apartheid: socially, economically and spatially. In 1996 the Growth, Employment and Redistribution (GEAR) strategy replaced the RDP. The policy was formulated to stimulate faster economic growth which was required to provide resources to meet social investment needs. In 2005, GEAR was replaced by the Accelerated and Shared Growth
Initiative for South Africa (ASGISA). The policy envisioned to reduce poverty by 2010 and halving unemployment by 2014 from the 28 % in 2004 to 14 % by 2012; and also recognized that the policies implemented to address these issues needed to be at the forefront of economic policy decision making. ASGISA was replaced with New Growth Path (NGP) in 2010. The NGP was envisioned to accelerate growth in the South African economy, and to do so in ways that rapidly reduce poverty, unemployment and inequality. To help overcome these structural challenges and contribute to the achievement of higher levels of economic growth, NGP was seen as a necessary policy. In early 2013, the
Government has introduced the National Development Plan (NDP), Vision -2030 as South Africa’s long-term socioeconomic development road map. NDP is viewed as a policy blueprint for eliminating poverty and reducing inequality and unemployment in South Africa by 2030.
However, all these policies formulated in the past twenty years impacted “little” in the living conditions of people that is to ensure that South Africa’s human resources are employed, promote sustainable livelihoods and improve social conditions to alleviate poverty. Today, unemployment is still high at 26.7% in March 2018 because employers are unable to find people with the relevant skills that they need to fill new opportunities or vacancies. A general trend observed is that South Africa is faced with a challenge of oversupply of unskilled labour and an under supply of qualifed and skilled labour. In contrast, specific skills and tertiary qualifications have and will become a key competitive advantage during the Fourth Industrial Revolution (FIR) era. For example, business leaders are struggling with demand for
productivity and innovation that can be filled only by people with the right skills. Following this, the South African active labour market policies should reﬂect and come to terms with the fact that
the world of work is changing and align their employment creation policies and strategies with business objectives. The FIR comes with technology changes that will continue to demand new skills. The skills mismatch will probably accelerate, worsening the imbalance between skills supply and demand as the new markets rise and the nature of work shifts. To build a pipeline of future skills, education institutions must design a curriculum that encourages critical thinking, creativity as well fast-track the acquisition of digital and Science, Technology, Engineering and Mathematics (STEM) skills to match the way people will work and collaborate in the FIR
DATA COLLECTION METHOD
This report has a particular emphasis on the job vacancy data collection method. Historically, vacancy data was from newspaper advertisements dated back in 2000. It started as a monthly count of newspaper advertisements.
In 2003, the weekly count of vacancy data was introduced and was combined with the collection of job vacancy advertisements from all major provincial newspapers. The job vacancy data was dissagregated by occupation, industry and province. There were several contributing factors to the termination of collecting vacancy data advertised in newspapers. Firstly, the collection and processing of the data was a costly manual process. Secondly, over the years there was a significant growth in the number of jobs advertised online. This shift to online advertising meant a newspaper based series no longer provided an accurate count of job vacancies advertised. The newspaper advertised jobs steadily decreased while at the same time online job advertisements increased continually. The shift from print to online vacancy advertising made historical newspaper vacancy series redundant since the detailed occupational breakdown was also required to make the data useful to policymakers.
JOB VACANCY TREND ANALYSIS
An analysis of the job vacancy as collected and processed by the Department of Labour in the 2017/18 financial is presented in this section. As explained above, job vacancy statistics are used to analyze and monitor the development of the labour market, e.g., the demand-side at national and international level. The job vacancy rates may, in part, reﬂect the unmet demand for labour, as well as potential mismatches between the skills and availability of those who are unemployed and those sought by employers. The vacancy statistics are also regarded as the key indicators for an assessment of the business cycle and for a structural analysis of the economy.
1.1 JOB VACANCIES BY ORGANIZING FRAMEWORK OF OCCUPATION (OFO)
Overall, the total number of job vacancy advertised captured in the 2017/18 financial year was 48 309 vacancies at an average of 4 026 job vacancy per month.
The number of job vacancies advertised and captured by the Department of Labour during 2017/18 financial year is presented in Figure 1. The highest number of job vacancies advertised from both Pnet and Info-Desk data sources are shown in May 2017 at 6 191 vacancies and the lowest number was in December 2017 at 2 587 vacancies. The trends in the number of job vacancies advertised simply indicates that each month is unique as per the need of the company which could be based on the turnover, new skills capacity needed, productivity growth etc.
Table 1: Percentage change of Job vacancy advertised by occupational group (OFO), 2017/ 18
Table 1 shows a constant decline in the number of job vacancies advertised from the first to the fourth quarters of 2017/18 financial year. Almost 30.5% of the total job vacancies captured were in quarter one (April to June 2017) of 2017/18 financial year. At this time, the official unemployment rate was at 27.7% and approximately 83 000 individuals had given up to actively searching for work and they reported to be discouraged work-seekers. Interestingly, by occupational category using OFO, the demand for elementary work was more at 19.1% in quarter
two as compared to quarter one, for clerical support workers was 34% more in quarter three than in quarter two and for technicians, it was 41% more in quarter four as compared to quarter three of 2017/18 financial year. The demand for labour in the skilled agricultural and plant and machine operators were less attractive in all quarters where the decline in the number of job vacancies advertised was most prominent in the skilled agricultural occupation in all quarters of 2017/18. This implies that the South African business cycle and other exogenous
factors underline these major changes that are expressed through the company’s desire to recruit new manpower or not for the production of goods and services to sustain the economic growth in the country.
Table 2 shows the educational requirements as per the occupational category of the job vacancy advertised in the financial year 2017/18. While managerial and professional occupations continued to attract more people with degree and diploma, those with less than matric educational achievements could found themselves suitable for elementary and services and sales workers’ occupations in the same period. Those with grade 12 educational achievements were also relevant across all occupations but they were predominantly attractive for technical
occupation. Furthermore, the vocational training and certification was also relevant for professional, technical and skilled agricultural occupations.
Overall, 39% of the total jobs advertised as captured in the Department of Labour database were attractive to those with degree or diploma educational achievements, followed with those with grade 12 at 25% in the financial year 2017/18.
Figure 2 shows the occupations that were in high demand during the 2017/18 financial year. Out of the 48 309 job vacancies advertised, the following vacancies were, in descending order (from >1 000 to <=500), in high demand: the sales and marketing managers followed by the software developers, shop sales assistants and retail and wholesale trade managers. While the shape of the industry will always be changing, the overall occupations in demand and requirements remain the same, as technology-driven approaches continue to gain interest with most
of the organisations.
1.2 JOB VACANCIES BY INDUSTRY (STANDARD INDUSTRIAL CLASSIFICATION (SIC))
According to Table 3, the community industry advertised more than one third (31.8%) of the total job vacancies advertised and it had the highest number with 15 366 job vacancies advertised in the financial year 2017/18. This was followed by the finance (29.3%) and trade industry (20%) of the total job vacancies advertised over the same period. By province, the highest number of job vacancies advertised was in Gauteng at 21 755 (45%), followed by the Western Cape at 7 650 (14%) and the Eastern Cape at 6 350 (13.1%) of vacancies.
The demand for labour in the following provinces: Eastern Cape, Free State, Limpopo, North West, KwaZulu-Natal and Northern Cape, were mostly dominated with the job vacancies from the community industry. However, the Gauteng, KwaZulu-Natal (again), Mpumalanga and Western Cape provinces displayed demand for labour (job vacancies advertised) in the finance industry. Then, the Limpopo, Mpumalanga and Western Cape provinces have also shown high demand for labour in the trade industry in the financial year 2017/18.
The trend confirms the main economic industries, e.g., community, finance and trade industries that have probably sustained employment creation under the reporting period.
The impact of this trend is that the slow economic growth observed in the performance of the real Gross Domestic Product (GDP) cannot be sustainable in line with the expansion of the labour force in the country over time. In other words, the job opportunities are limited and not sufficient to absorb a large number of new entrants in the labour market in particular those who have not worked in the past fve years.
Table 4 shows that job vacancies advertised that were advertised in the community industry required persons to have passed a degree or a diploma, grade 12, postgraduate, vocational training and certification and less than grade 12 studies. The trend was also the same in the trade industry. These two were the only industries where all advertised job vacancies attracted all educational categories in 2017/18. On the other hand, job vacancies advertised in finance industry required more people who have passed a degree or a diploma, grade 12, postgraduate and the vocational studies. It is also interesting to see that vocational training and certification, e.g., artisan skills were in high demand for a person to be employed in the mining and manufacturing industries over the same period.
Overall, 38.6% of the total job vacancies advertised in 2017/18 required people with degree or diploma educational achievements. This implies that there is a shift to a more educated labour force leading to an increasing share of high-skilled jobs in the economy2. The impact in the labour market is that those with less than grade 12 educational achievements will probably remain unemployed in the long-run as it was also noted that the FIR will also bring its own labour market challenges.
TRENDS IN THE LABOUR FORCE USING OTHER LABOUR MARKET DATA SOURCES
Employment has increased by 165 000 over the past year, but it has not been rapid enough to absorb the 2.2 million new entrants into the labour market in March 2018. The official unemployment rate has therefore also decreased by 1.0 percentage point from 27.7% in March 2017 to 26.7% in March 2018 as per the latest Quarterly Labour Force Survey (QLFS) data but the unemployment rate remains very high.
A study reported in a working paper on the South African labour market shows two problematic trends that contribute to the unemployment crisis. The first is that having a grade 12 no longer leads to better labour-market opportunities. This statement suggests that people who do not have a post-matric qualification have low chances of fnding work. Their education and skills levels are not high enough to meet the current and future skills requirement of the labour market. Second, there is no longer a guarantee that it will be easier to find a job in South Africa’s two most developed provinces such as the Western Cape and Gauteng. The official unemployment rate in the Gauteng was 28.6% higher when compared with a few of the country’s poorer provinces. While the Western Cape had the high unemployment rate of 19.7%, although it was the lowest unemployment rate as compared to other provinces.
2.1. LABOUR MARKET INFORMATION BASED ON ADMINISTRATIVE DATA
2.1.1. Public Employment Services data
The Public Employment Services (PES) branch in the Department of Labour plays an important role by assisting work-seekers to obtain jobs and employers to fll their vacancies. There are several good arguments for the provision of employment services. By transmitting information, they can contribute to labour-market efficiency and transparency. PES can also promote equity in access to the labour market and help the disadvantaged workers in rural areas to find employment. Furthermore, in countries that have an unemployment benefit system like South Africa, public employment services, if well designed and implemented, can play an important role in verifying eligibility for receiving benefits and reduce costs associated with unemployment through ensuring rapid matches. Despite the importance of the PES as a search channel, very little is known about its impact on the labour market.
It has shown that unemployment benefit recipients, low skilled workers, long-term unemployed and workers with few job opportunities were more likely to use PES5. Thus, PES is bound to stay the test of time in order to adapt to changing the South African labour market realities
for the foreseeable future and help render organisations affected by labour demand and supply more efficient through greater rationalization of activities and services provided.
According to Figure 3, out of the total registered work-seekers (817 239) in the Department of Labour, Gauteng had registered the highest at 24.2% and the lowest was in the Northern Cape province at 3.2% in 2017/18 financial year. It was followed by the KwaZulu-Natal with (16%), Western Cape, Eastern Cape and Free State provinces which registered (11.8%), (11.3%) and (11.0%) respectively.
Quarterly analysis, on the other side, shows that about 34% of work-seekers were registered in quarter four of 2017/18 financial year. It constituted the highest and the lowest was recorded in quarter three of the same period.
When looking at the impact in the labour market, the statistics of registered work-seekers are almost 17 times more than the number of job vacancies advertised that were recorded in the Department of Labour. This supports the argument that the labour force is expanding rapidly at the rate probably higher than employment creation in the country. The majority of those who are reported to be unemployed are those with low skills and limited experience. Therefore, the triple challenge of unemployment, poverty and inequality in the South African labour
requires, double efforts from all key partners in the development of employment policies.
Figure 4 shows the number of placed work-seekers in employment opportunities by province using the Department of Labour data. While the overall placement rate in 2017/18 financial year stood at 6.5% (or 53 601), the provincial placement rates varied over the same period. In the Limpopo province, almost 17% (10 792) of the provincial registered work-seekers (64 992) were offered employment opportunities through the Department of Labour. It was almost 10% placement rates in the KwaZulu-Natal and Northern Cape from the total registered work-seekers in each of the province. The lowest placement rates of work-seekers were recorded in the following provinces:
Gauteng (3.4%), Mpumalanga (3.5%) and North West (1.8%) over the same period.
Quarterly analysis shows quarter four of 2017/18 recorded the highest rate (37.5%) of work-seekers who were placed in employment opportunities and the lowest (17.5%) was recorded in quarter one over the same period.
2.1.2. Unemployment Insurance Funds (UIF) data
Involuntary job loss and unemployment can have devastating impact both on a household and the general economy. The loss of income has an immediate effect in the reduction of consumer spending. A household that endures unemployment is likely to cut spending, often in excess of the loss of income due to the uncertainty and the resumption of spending can lag after the return of income. For this reason, the government introduced the training layoffs scheme which is financed by the National Skills Fund and the Sector Education and Training Authorities
(SETA’s). It offers a further alternative to retrenchment and, while the workers forfeit their wages during the layoff period, they qualify for payment of up to 75% of their basic wage payable for a maximum of six months. The scheme is available to vulnerable workers who would otherwise have lost their employment due to retrenchments.
Table 5 shows the distribution of ordinary UI claims created by industry per quarter in the financial year 2017/18. The trade industry (44.8%) followed by the agriculture (10.5%), manufacturing (10.5%) and the construction (9.2%) industries constituted approximately 75% of the total ordinary UI claims created in 2017/18 financial year as a result of dismissals or retrenchments etc. Not surprisingly, the trade industry has also shown the high demand for labour in terms of the proportion of job vacancy advertised over the same period. This trend signals the persistence of short-term employment contracts in the labour market, e.g., casualisation. In this spirit, the official statistics confirm that 14% of the total employees (13 964 000) in March 2018 have reported to have limited employment contract and 60% of them only contributed to Unemployment Insurance Fund (UIF).
In addition, the Quarterly analysis shows, on the other hand, that quarter three (27.1%) recorded more ordinary UI claims as compared to other quarters of 2017/18.
When you disaggregate UI claims data by age group, Figure 5 shows the highest Percentage of ordinary UI claims was originated from the age group of 25 – 34 years with an average of 36% in 2017/18 financial year. This is in line with the boiling and heated debates that had attracted the Government’s attention to initiate job creation programmes such as the wage subsidy programmes to reduce the high unemployment rate among youth in the country.
The impact of this statistical trend is derived through a large number of registration of work-seekers in the ESSA system where the low placement rate has also been recorded in 2017/18. Altogether, the statistical variation in these numbers can also explain the growth in the labour force, in particular, the high or low unemployment levels in the country.
The dynamics and challenges in the supply side of labour are also captured in Figure 6 where the educational qualifications of the ordinary UI claimants are examined. The results simply illustrate that the majority of UI claimants were youth (25-34 years), with low educational qualifications (Grade 10-11, Grade 12) and reported that end of contract was the main reason for claiming UI benefits. This is not well aligned with the demand for labour requirements as detailed in the number of job vacancies advertised above.
Thus, one of the notable gaps is the probability of having more people to fall into long-term unemployment because of the possibility of a mismatch between the skills acquired and supplied in the South African labour market. The prioritisation of youth employment programmes as reﬂected in a number of policies including the NDP and the Mid-Term Strategic Framework (MTSF) by the South African Government could be supported towards the FIR
Figure 7 shows that more than half (52%) of the ordinary UI claimants reported that end of contract employment was the main reason for applying for short-term financial relief (ordinary UI) benefits. It constituted the largest group of beneficiaries and the lowest was for those who reported that business closed (3.4%) was the reason for termination in commercial employment in the 2017/18 financial year.
Quarterly analysis shows that end of employment contract for UI claims decreased by 17 081 claims between quarter three and four of 2017/18 after they rose by 8 103 between quarter two and three of 2017/18. On the other hand, the retrenchment UI claims constantly increased (5 865) between quarter one to three before they dropped by 6 408 between quarter three and four of 2017/18. The dismissed and the business closed UI claims also decreased in the fourth quarter after they increased in the third quarter of 2017/18 fnancial year.
2.2. LABOUR MARKET INFORMATION BASED ON SURVEY DATA
For the purpose of this section, the focus is on the unemployed statistics as part of the available pool of unemployed persons to respond to the number of job vacancies advertised as recorded by the Department of Labour in the country in the 2017/18 fnancial year.
According to Figure 8, the only quarter that recorded a decrease in the level of unemployment was October to December 2017 (Q3) by 330 000 while other quarters recorded an increase of unemployment levels in the 2017/18 financial year. The highest increase of (100 000) in the level of unemployment was recorded in January to March 2018 (Q4) and in July to September 2017 (Q2), it increased by (33 000). Overall, the unemployment level is approximately 6 million in the country while less job vacancies advertised were recorded over the same period. These statistics remain alarming for the South African Government in light of the new dawn since December 2017 at the national presidential elective conference of the ruling party.
With the high level of unemployment by March 2018, people who did not complete secondary education and those who completed secondary education were most likely to be unemployed.Table 6 shows that in July to September 2017, unemployment levels of people who completed secondary school picked up by 81 000 before they declined by 74 000 in October to December 2017 On the other hand, unemployment level of people who did not complete secondary education picked up by 60 000 in March 2018. The trends in unemployment levels in the country confirm the expansion of the labour force which is quite significantly higher than the number of job opportunities created in the financial year 2017/18. Significant to note is that the labour absorption rates in the country needs to improve from the current situation (43.5% in March 2018) in order to redress the imbalances that sustain the poverty and inequality over time.
According to the Quarterly Labour Force Survey results, 63.4% of the total unemployed were youth (15-34 years) in March 2018. This is mostly 2.3 times the national average of 26.7% unemployment rate in the same period. The vulnerability of youth is a grave concern when one considers the high rate of youth not in employment, education and training (NEET). In March 2018, the NEET rate for youth aged 15-24 was at 32.4% (2% more than in quarter two of 2016). Thus, there is a need for robust response by the South African Government to find ways of reducing youth unemployment in the country in line with the NDP, Vision 2030.
According to to Table 7, unemployment levels had increased in all age groups between October to December 2017 and January to March 2018. The highest increase of unemployment level was seen in the 45-54 years’ age group (32 000) followed by the 35-44 years’ age group (20 000) and the third highest of was seen in the 15-24 age group (16 000).
by the Department of Labour – South Africa