The Solidarity-ETM South African Labour Market Index (LMI) fell to 43,5 in Q2 2015 from an upwardly revised figure of 43,7 in Q1 2015 (43,5 in previous release). The LMI is a measure of job and wage security in the South African labour market, where 50,0 is the breakeven level between rising and falling security.
The index has remained below 50,0 since Q1 2011, marking over four years now of deteriorating job and wage security as underlying economic conditions deteriorated. Currently the index signals slow or no real wage growth and retrenchments in some sectors.
The Solidarity Employee Confidence Index (ECI) fell again, to 34,1, marking a second straight decline and confirming that perceived job security among the survey sample has so far in 2015 fallen below levels in Q1 2014 when mass strike action in the mining and industrial sectors crippled output and generated a sharp spike in job insecurity. Currently, only 46% of respondents regard their job security as very secure, down from 58% in Q1 2014. The implication is that job security is yet to recover since the Q1 2014 strike, suggesting that the strike episode may have had lasting damaging effects on labour markets, but also that the economy is structurally weak outside the strike-hit mining and metals sectors.
The Labour Affordability Index (LAI) is estimated to have risen somewhat in Q2 2015 from 39,6 to 42,7, but the index remains comfortably below 50,0 and therefore indicates that companies as well as government find it expensive to hire more staff relative to the output benefits of doing so. Corroborating the ECI, the LAI shows that average real wage bargaining power is still quite weak.
The ETM Business Cycle Index remained above 50,0 in Q2 2015 at 53,6. The index moved above 50.0 in Q4 2014 on the back of lower commodity prices, especially oil prices, and consumer sector relief from softer inflation. Unfortunately the upward trend in the BCI is weak and business conditions are not expected to improve dramatically in the second half of 2015.
For a more detailed treatment of the composition of the index and its subindices, see the January–March edition of the South African Labour Market Report, or the background paper on the index. Both are obtainable from the Solidarity Research Institute on request.