Labour Market index shows improvement, but is it sustainable?
12 June 2017
Trade union Solidarity released the Solidarity-ETM Labour Market Index (LMI) for the first quarter of 2017 today. The LMI is a measure of job and wage security in the South African labour market, where 50 represents the break-even level between rising and falling security.
The LMI improved strongly in the first quarter to 47,8 from a downwardly revised 42,2 in Q4 of 2016. This is the best level since Q3 2013 and is indicative of relatively friendlier labour conditions after a lengthy period of declining security. However, the index remains below 50, still indicating that job and wage security is broadly declining, be it at a slower pace.
According to Gerhard van Onselen, economics researcher at the Solidarity Research Institute, an improvement in business cycle indicators played the largest role in the Q1 improvement. “We think this improvement is mostly due to sustained rand strength in 2016 following the Nenegate scandal, which has led to relatively improved business confidence and has relieved the pressures on import costs.”
“It remains to be seen, however, whether the improvement in the LMI can be sustained in the following quarters. While the improvement of the LMI broadly agrees with the Reserve Bank and OECD leading indicators, the improvement did not translate to an increase in q/q annualised GDP growth, which moderately declined to -0,7% in Q1 2017 from -0,3% in Q4 2016, confirming an official technical recession.”
“The present dilemma is that cyclical improvements in business cycle indicators in the first quarter, and a decrease in the job insecurity, as measured by Solidarity Employee Confidence Index, could not overcome the stagnating conditions of the South African economy to avoid an official recession. This leads us to conclude that structural economic weaknesses arising from political uncertainty and a harmful anti-business policy environment are presently weighing more than cyclical improvements,” Van Onselen concluded.
The LMI forms part of the Solidarity-ETM South African Labour Market Report. Included in the April – June 2017 edition of the report:
1. Selected Labour Market Statistics
2. Solidarity-ETM Labour Market Index for Q1 2017
3. Will a Zuma successor turn the ship around?
4. The business world: What does equal in the eyes of the law mean?
5. ETM feature: Life after the junk downgrade
6. Macro-economy: Cyclical upturn confirmed, but data remains mixed.
The complete LMI overview and SA Labour Marker Report may be downloaded here.
Issued by Gerhard van Onselen, Economics Researcher: Solidarity Research Institute, 12 June 2017
Labour Market index shows improvement, but is it sustainable? - Solidarity
Movement says economic weaknesses arising from political uncertainty and a harmful anti-business policy are hindering improvements
Labour Market index shows improvement, but is it sustainable?
12 June 2017
Trade union Solidarity released the Solidarity-ETM Labour Market Index (LMI) for the first quarter of 2017 today. The LMI is a measure of job and wage security in the South African labour market, where 50 represents the break-even level between rising and falling security.
The LMI improved strongly in the first quarter to 47,8 from a downwardly revised 42,2 in Q4 of 2016. This is the best level since Q3 2013 and is indicative of relatively friendlier labour conditions after a lengthy period of declining security. However, the index remains below 50, still indicating that job and wage security is broadly declining, be it at a slower pace.
According to Gerhard van Onselen, economics researcher at the Solidarity Research Institute, an improvement in business cycle indicators played the largest role in the Q1 improvement. “We think this improvement is mostly due to sustained rand strength in 2016 following the Nenegate scandal, which has led to relatively improved business confidence and has relieved the pressures on import costs.”
“It remains to be seen, however, whether the improvement in the LMI can be sustained in the following quarters. While the improvement of the LMI broadly agrees with the Reserve Bank and OECD leading indicators, the improvement did not translate to an increase in q/q annualised GDP growth, which moderately declined to -0,7% in Q1 2017 from -0,3% in Q4 2016, confirming an official technical recession.”
“The present dilemma is that cyclical improvements in business cycle indicators in the first quarter, and a decrease in the job insecurity, as measured by Solidarity Employee Confidence Index, could not overcome the stagnating conditions of the South African economy to avoid an official recession. This leads us to conclude that structural economic weaknesses arising from political uncertainty and a harmful anti-business policy environment are presently weighing more than cyclical improvements,” Van Onselen concluded.
The LMI forms part of the Solidarity-ETM South African Labour Market Report. Included in the April – June 2017 edition of the report:
1. Selected Labour Market Statistics
2. Solidarity-ETM Labour Market Index for Q1 2017
3. Will a Zuma successor turn the ship around?
4. The business world: What does equal in the eyes of the law mean?
5. ETM feature: Life after the junk downgrade
6. Macro-economy: Cyclical upturn confirmed, but data remains mixed.
The complete LMI overview and SA Labour Marker Report may be downloaded here.
Issued by Gerhard van Onselen, Economics Researcher: Solidarity Research Institute, 12 June 2017
