Peter Little | Fund Manager | Anchor Capital | mail me |
Stats SA produces two quarterly surveys detailing South African employment.
They are:
- The Quarterly Employment Survey, which examines VAT-registered businesses and includes detailed industry-level data on non-agricultural, formal employment; and
- The Quarterly Labour Force Survey, which surveys households and includes details on informal employment, agricultural employment and demographics of the workforce.
Since these surveys are both samples, they are estimates rather than exact numbers and there are some inconsistencies between them. However, we have attempted to combine these reports in a way which gives a picture of employment dynamics to identify those areas of employment which are potentially at risk from the COVID-19 induced lockdown.
At the end of 2019, SA had 38.7 million people of working age (15–64), which can be broken down broadly into:
- Economically inactive: 12.7 million (mainly students and homemakers).
- Unemployed or discouraged work-seekers: 9.6 million.
- Employed: 16.4 million, which is further broken down into:
- Formal employment: 11.3 million.
- Informal employment: 2.9 million.
- Employment in private homes (mainly domestic workers): 1.3 million.
- Agricultural employment: 900,000.
Among the employed, the categories below seemed to us to be most at risk of losing employment as a result of the COVID-19 crisis and the lockdown:
- Informally employed: 2.9 million, including those working in:
- Wholesale, retail, motor trade, hotels and restaurants: 1.2 million.
- Construction: 300,000.
- Community, social and permanent services: 400,000.
- Those employed in private homes (mainly domestic workers): 1.3 million.
- Formally employed: 4.3 million, including those working in:
- Wholesale/retail/motor trade: 2 million.
- Construction: 900,000.
- Hotels and restaurants: 300,000.
- Real estate activities: 200,000.
Combined, these categories represent around 50% of the current SA labour force. However, within those categories are many resilient sources of employment, including those involved in ‘essential retail’.
The good news is that there are some industries with chunky employment that should be reasonably safe through this lockdown (representing about 25% of employment).
These industries include:
- Government employees – 2.1 million.
- Banks, insurers, accountants and lawyers – 800,000.
- Food and beverage manufacturing – 300,000.
- Mining industry – 500,000.
If we break down SA’s 38.7 million people of working age (15–64) into the three broad categories highlighted above, Figure 1 shows how these percentages will look by segment.
Figure 1: Working age population
Source: Stats SA, Anchor
We have reclassified 2.9 million people into the ‘unemployed’ category, which Stats SA (in line with global best practice) has included in ‘not economically active’ (and therefore not part of the unemployment numbers).
These are people who have become discouraged and are no longer actively seeking employment. That adjusts our numbers to 9.6 million people classified as unemployed, of whom more than 80% have either been out of work for more than a year or are no longer seeking employment.
Figure 2: Unemployed
Source: Stats SA, Anchor
The 12.4 million economically inactive working-age South Africans can be further broken down into the following sub-categories:
Figure 3: Economically inactive
Source: Stats SA, Anchor
SA has approximately 16.4 million people who have some form of employment, broadly broken down into the categories shown in Figure 4.
Figure 4: Employed South Africans
Source: Stats SA, Anchor
The labour force can be further dissected into industry classifications as shown in Figure 5 below:
Figure 5: Employment by industry, in thousands
Source: Stats SA, Anchor
The table in Figure 6 further breaks down the labour force into industry and sub-industry levels, split between formal and informal employment. We use a traffic light system to identify those industries where employees might be at risk of losing their jobs as a result of the COVID-19 crisis and related lockdown.
The percentages in the table below represent the portion of our labour force in each of the categories. Those in orange text are categories which may be at risk, but since some are extremely broad (e.g. retail) they might also include sub-sectors that are not at risk (e.g. those employed at pharmacies or grocery stores). The only category that we have highlighted in red is ‘hotels and restaurants’, representing about 2.2% of the total labour force, which seems fairly obviously at risk.
Figure 6: Labour force by industry and sub-industry, split between formal and informal employment
Source: Stats SA, Anchor
SA has about 16.9 million households, according to the most recent Stats SA survey (2016), which means that even in a best-case scenario (making the unlikely assumption that each household has only one income earner), we’d fall marginally short of having an income for each household. The reality is probably significantly worse, in which case social benefits would pay an increasingly important role. In March 2019, the government was paying 18 million social grants, totalling about R14 million/month.
Figure 7: SASSA grants – March 2019
Source: SASSA, Anchor
These grants were apparently paid to 11 million beneficiaries. In practice, about 70% were child subsidies (c. R400/month) representing around 37% of the monthly grant budget, 20% were old age grants (c. R1,700/month) representing 43% of the grant budget and most of the rest was disability grants paid to about one million people (c. R1,700/month).
While it is great to know that government is doing a good job of caring for the most vulnerable in society, it still leaves a huge income gap for many adults if informal employment and employment in vulnerable industries comes under pressure because of the pandemic and the resultant lockdown.
