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Solidarity-ETM Labour Market Index Q3 2015: Employee confidence remained low in Q3 2015

Wednesday, November 4th, 2015

Employee confidence remained low in Q3 2015.

SA Labour Market Index Summary (50,0 = neutral)
Q3 2015 Q2 2015 Q3 2014 Weight
LMI 43,4 42,9 43,0 100%
Employee Confidence 39,2 34,1 40,4 33,3%
Labour Affordability 39,5 40,5 40,9 33,3%
Business Cycle 51,4 54,3 47,7 33,3%

 

 

  • The Solidarity-ETM South Africa Labour Market Index (LMI) increased to 43,4 in Q3 2015 from a downwardly revised 42,9 in Q2 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 break-even level between rising and falling security.

 

  • Although the index has been relatively stable since late 2013, it has stabilised below 50,0 (around 43 index points), indicating a prolonged slump in job and wage security with slow or no real wage growth and retrenchments in some sectors. The LMI has been above 50,0 for only 3 out of 31 quarters since December 2007, reflecting the structural damage done to the job market in the previous business cycle.

 

  • The Solidarity Employee Confidence Index (ECI) rose in Q3 2015 to 39,2, recovering somewhat from its slump to 34,1 in Q2. There was barely any increase in the number of respondents reporting improved job security in Q3, but there was a notable decline in the number reporting declining job security and therefore a notable increase in those reporting no change. Only 10% of those surveyed perceived their job security to have increased since Q2.

 

  • Labour affordability at a macro level remained low in Q3, dipping slightly from Q2. The Labour Affordability Index (LAI) is estimated to have fallen marginally from 40,5 to 39,5, and the index remains comfortably below 50,0. Companies as well as government find it expensive to hire more staff relative to the output benefits of doing so. Labour affordability increased rapidly and briefly in 2010, but since then has been declining.

 

  • The ETM Business Cycle Index (BCI) fell from 54,3 to 51,4, suggesting the period above 50,0 which started in Q4 2014 is likely to be short-lived. With macroeconomic conditions weak and the South African car market under strain, the BCI is likely to head below 50,0 in the quarters ahead.

Note:

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 on request from the Solidarity Research Institute.

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