The largest job losses were registered in the tertiary sector and concentrated mainly in the trade (-32 000) and finance (23 000) sectors (see figure 2).


Employment levels also decreased in government (8 000), manufacturing (4 000) and transport (1 000).


Stats SA ascribes the job losses in these industries to the “end of contracts for workers who were employed during the festive season.”


Although seasonal dynamics are a consideration, the effect was likely compounded by falling activity in these sectors. Specifically, the Q1.17 GDP update showed a significant contraction in the tertiary sector, of 2.0% quarter on quarter seasonally adjusted annualised (qqsaa), on broad based weakness (see figure 5).


Compared to a year earlier, employment levels were down by 58 000, with the largest job losses of 57 000 in government (see figure 3). This would reflect lower local government, provincial department, health and social work employment levels, consistent with efforts to reduce civil service headcounts in non-critical posts to contain the growth in civil service compensation. Employee compensation is the largest current expenditure item, comprising 35% of total expenditure.


Labour market prospects remain particularly weak. The economy entered a technical recession in Q1.17 whilst Q2.17 business confidence deteriorated to levels last seen in the great global led recession of 2008/09. Depressed business confidence reflects expectations of suppressed future economic growth which therefore indicates that the private business sector will not add jobs or boost investment at the present time. Indeed, recent survey evidence drawn from the retail and manufacturing sector surveys for Q3.17, signals further expected declines in the number of individuals employed (see figures 6 and 7).


Concurrently, should the Treasury remain committed to fiscal consolidation under its new leadership, there will be limited scope for an expansion in the civil service.

The Quarterly Employment Survey also provides detail on wage developments across the sectors.


The growth in the compensation of employees decelerated to 6.0% y/y in Q1.17 from 6.6% y/y previously. Weaker income growth was a contributing factor to the contraction in household consumption expenditure in Q1.17. With household spending comprising 60% of GDP, the repercussions are significant. Weaker growth in compensation, higher unemployment levels and weaker consumer spending will also weigh on Treasury’s revenue collections This raises the risk of fiscal slippage in the absence of revenue and expenditure side adjustments.


Stats SA also reported that average real monthly earnings for non-farm employees rose 1.9% y/y to R18 375 in the three months to February 2017.


Real monthly earnings in the construction sector grew at the fastest pace of 8.6% y/y to R14 415.


The highest average monthly earnings of R37 265 was paid in the electricity sector, followed by transport (R21 975) and the civil service (R21 962).