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Wednesday, November 20, 2013

Statistics on severity of labour crisis do not tally

ACCORDING to Statistics South Africa’s employment figures released last month, the unemployment rate fell sharply from 25.6% to 24.7% in the third quarter of this year. During the quarter, 308,000 more people were employed than in the previous quarter, with the formal sector contributing most of these jobs.

Stats SA adds that a further 114,000 people left unemployment, with large numbers expressing newfound hope about their prospects of finding work. According to the report, the improvement is not a once-off event: Stats SA’s Quarterly Labour Force Survey (QLFS) indicates that employment rose in seven of the past nine quarters.

According to Stats SA’s report, employment has risen from 13-million at the bottom of the 2010 recession to more than 14-million this year — a gain of more than 1-million jobs. But we know that economic growth slowed from 4% to 1.7% a year over the same period. Moreover, since 2008, the number of unemployed has risen from 3.9-million to 4.6-million. At present, 25% of people — and 32% of those aged 15-24 — are neither in education nor employment.

An important statistic released recently suggests that there is a great deal more employment than Stats SA surveys suggest. The latest Tax Statistics reports that there were 15,418,920 individual taxpayers in South Africa as at February 28. The reason this statistic is so important is that the South African Revenue Service (SARS) now requires that all employees, irrespective of earnings, are registered for pay as you earn (PAYE). Previously, only employees earning above the tax threshold were required to be registered for PAYE.

Adcorp approached the Treasury and Stats SA in an attempt to square SARS’s figure of the number of people registered for PAYE — 15.4-million — with Stats SA’s reported total employment figure of 13,721,000 for the same period — a discrepancy of 12.4%. As it is doubtful that 712,000 farm workers, 1,093,000 domestic workers and 2,221,000 informal sector workers are registered for PAYE to any significant degree, this leaves 9,694,000 formal, nonfarming, nondomestic workers, according to Stats SA — a discrepancy with SARS’s statistics of 59.1%.

The Treasury confirmed that the PAYE figure "includes retired people and ex-employees and spouses who are still on record", which suggests there may be some overcounting in SARS’s figures. But as employer compliance with SARS’s new PAYE regulations improves, we may yet discover that SARS’s figure is, itself, undercounting the number of employees receiving any sort of income.

In separate correspondence, Stats SA said it was attempting to reconcile the SARS and QLFS data, and has been doing so since early last year. An announcement by Stats SA is due soon, according to its population statistics department.

The upshot is that there can be no question that South Africa’s labour market is in crisis. Two important indicators of the cyclical health of the labour market — the involuntary retrenchment rate (which is at a record high) and the rate of voluntary job changes (at a record low) — suggest that the job market is in a deep crisis.

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