One of South Africa’s biggest employers haemorrhaged 500,000 jobs

One of South Africa’s biggest employers, the manufacturing sector, has shed 50,000 jobs over the past year, bringing the total to almost 500,000 lost jobs in the last ten years.

Trade & Industrial Policy Strategies (TIPS), an economic research institution, stated that the overall recovery from the pandemic conceals significant disparities between economic sectors, with goods production being in a particularly precarious state.

“Private services, agriculture, public services, and logistics now produce more than pre-pandemic, contributing 40% of the GDP in Q1 2024, while the rest of the economy remains underwater,” it said.

Data compiled from Stats SA shows that the value added in construction is 17% lower than in the fourth quarter of 2019, having seen a steady fall over the period. Manufacturing and retail have shrunk by 5%.

Mining has seen a modest decline in tonnage sold although its revenues have fluctuated substantially with world prices.

This has materially impacted on employment.

The proportion of working-age adults with jobs increased by 1% in the year leading up to March 2024, reaching 41% in South Africa.

However, this rate still falls below pre-pandemic levels due to the slower pace of job recovery compared to population growth.

In comparison, around 60% of the adult population in the rest of the world is employed.

Job losses

Manufacturing production in South Africa has fallen well short of market expectations over the last financial year.

Manufacturing lost 50,000 jobs in the year to March 2024, according to the Quarterly Labour Force Survey (QLFS), while construction also shrank slightly.

Concerningly, TIPS noted that these sectors employed around half a million fewer people than in the mid-2010s and 150,000 fewer than before the pandemic.

In contrast, the rest of the economy, which consists mostly of private and personal services, retail, logistics, and social services, gained 550,000 jobs, or 4.6%, in the year ending March 2024.

Within the manufacturing industry, significant job losses were reported in the auto, glass, and non-metallic minerals sectors.

The transport equipment industry saw a 20% decrease with over 20,000 jobs lost, while employment in glass and non-metallic minerals also declined.

Meanwhile, employment expanded in the food and wood/paper value chain, but other manufacturing industries experienced job losses.

Despite job gains in some years, the QLFS reports that manufacturing employment has dropped significantly since 2010, and recovered only partially from the pandemic downturn.

In contrast, employment in the rest of the economy is now substantially above its pre-pandemic level, although it shrank over the six months to March 2024.