Formal sector bleeds jobs


South Africa has been engulfed by increasing casualisation of jobs with the informal sector now accounting for about 32,8% of all jobs in the country.

This is according to the latest Adcorp Employment Index which shows that in September the number of people eking out a living in the informal sector had bulked to 6,2 million.

“The largest (jobs sector) still remains officially recorded employment – numbering some 12.7 million people,” says Sharp, “yet South Africa’s formal labour market is gradually decreasing,” says Adcorp labour economist Loan Sharp. But the informal sector has been growing at staggering rates as the formal economy continues to bleed jobs.

Shard says the process of informalisation whereby formal jobs with contracts of employment become informal jobs with no contracts has long been taking place in South Africa, and points to two major causes.

“Firstly, the influx of around 1.5 to 3.5 million illegal migrants from neighbouring countries notably Zimbabwe, Malawi and Mozambique into South Africa’s labour market. This has led to large-scale evasion of laws around minimum wages and basic working conditions,” says Sharp.

“Secondly, and more difficult to quantify, is the effect of high wages, heightened strike action and restrictive labour laws and regulations in South Africa which has rendered labour an unattractive alternative to employers who have opted to automate, mechanise, outsource and offshore these activities.”

Sharp said growth in economic activity in the informal sector is rising in South Africa while official employment is under pressure.
“The size of the informal job sector has peaked at almost half that of officially recorded employment in South Africa. In September alone, this sector grew at an annual rate of 7.7%.”

Another key finding is that during September, while employment grew by a slight 2.5%, most of this growth was due to a 4.0% increase in jobs through temporary employment agencies.
Meanwhile, reductions in employment were seen in three key sectors, manufacturing, transportation and logistics, and construction together leading to a loss of 25 000 jobs.

Sharp notes: “Offsetting these losses were employment gains in government (+10.5%), finance (+8.2%) and wholesale and retail trade (+6.6%).

“Continuing a long-standing trend,” says Sharp, “our data this month also shows that high-skilled and office worker jobs increased by 8.8% (or 48 000 jobs) while employment of low- and semi-skilled workers fell by 6.4% (or 26 000 jobs).”

Outlining  features of the informal job market, Sharp made the following list:

  • An absence of contracts of employment, both written and verbal
  • Non-payment of contributions to medical aids and/or pension funds by employers
  • Non-payment of statutory deductions such as unemployment insurance and skills development levies by employers
  • Lack of Pay-As-You-Earn (PAYE) reporting to SARS
  • No recourse to formal labour dispute resolution mechanisms (CCMA, labour courts) by employees.

Says Sharp: “The informal sector in South Africa is just 30.2% smaller than standard employment (permanent work). It is 63.5% larger than non-standard employment (temporary and agency work).

“Our findings this month reveal that there were as many as 2.1 million employers, each employing on average 2.9 workers, in the informal sector.”


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