LMI – challenging conditions persist in Q1 2018

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The Solidarity-ETM Labour Market Index halted its continuing improvement since Q1 2016 in the first quarter of 2018. The index is an indicator of job and wage security in the South African labour market. The index fell back from 50 in Q4 2017 to 49 in Q1 2018. At 49 the index remains below its neutral level, indicating that challenging labour market conditions persisted in the first quarter of 2018.

solidarity“A drop in the index’s components for business cycle conditions and employee confidence contributed to the marginal decline. The component for labour affordability improved from a revised 47 in Q4 2017 to 50 in the first quarter, and although this indicates a material improvement in the affordability of labour, it was not enough to raise the index over 50,” said Gerhard van Onselen, economics researcher at the Solidarity Research Institute.

Van Onselen further noted that employee confidence, a subcomponent of the index, remained elusive in the first quarter dropping from 50 (in Q4 2017) to 48. “The first quarter results of the Solidarity member survey showed no positive response in perceptions of job security in response to the political optimism surrounding the Ramaphosa presidency. During this time, a vote in parliament also favoured reviewing options for expropriation of land without compensation, which likely played a role in the decreasing job and wage security in general,” Van Onselen added.

“It is noteworthy that the index is persisting at neutral levels despite relatively stronger global and domestic economic conditions we’ve been observing since early 2016. In essence, the political optimism since the first quarter is still weighed down by damaging policies, already enforced and newly proposed,” Van Onselen concluded.

For the complete Labour Market Report, Click here.