Employment agency Adcorp has drawn the ire of the statistician-general and economists for saying that the country’s unemployment rate is closer to 8 percent than the official 25 percent, if informal employment is accounted for.
However, one economist sprang to Adcorp’s defence yesterday, saying the official employment data were unreliable.
In the Adcorp employment index for June, the firm’s labour market analyst, Loane Sharpe, said it was worth noting that the country’s unemployment rate was one of the highest globally. In 2010 there were 8.5 million unemployed and under-employed people.
The report states that this does not mean that millions of South Africans are destitute and starving.
Adcorp’s research shows that informal sector employment – employment that does not necessarily involve a formal employment contract or membership of a pension fund or medical aid – is substantially underestimated.
“If we fully account for informal employment, South Africa’s unemployment rate is closer to 8 percent than 25 percent. This suggests that many millions of enterprising South Africans have been labelled as ‘unemployed’ incorrectly. This, too, is an inconvenient fact: many millions of enterprising South Africans make a living on a daily basis and neither pay taxes nor adhere to labour laws,” the report states.
Employment surveys are done and released quarterly by Statistics SA, a government agency.
The official survey released in May showed that the rate of unemployment was 24 percent in the first quarter of 2011.
The head of Stats SA, Pali Lehohla, who is the country’s statistician-general, said Adcorp’s unemployment claims were “spurious and barren on methodology and science of design, collection, processing and dissemination of labour market statistics”.
He said the figures “represent nothing but metaphorical hallucinations of an intoxicated institution that uses the lamp post for support rather than shedding light. Public statistics should shed light rather than be used to support preconceived positions.”
Rudi Dicks, the director of the National Labour and Economic Development Institute, was equally dismissive of Adcorp’s figures. He said that if faith was put in very unreliable data sources such as those produced by Adcorp, then this would indicate a clear misrepresentation of facts and reliable data sources produced by official data sources.
“Secondly, how do we argue that many people who have no choice in engaging in informal economic activity, such as parking guards or fruit and vegetable sellers, for example, are employed? This form of economic activity is so marginal that it hardly can be considered subsistence, let alone employment,” Dicks said.
Craig Lemboe, an economist at Stellenbosch University’s Bureau for Economic Research, said 8 percent was low, and it put the unemployment rate at the same levels of some developed countries, in fact lower than the most recent estimates for unemployment in the US.
He said the estimate from Stats SA was based on the best practice methodology in accordance with International Labour Organisation definitions.
Sharp fought back, saying it was true that Adcorp did not use a nationwide statistical sample. “However, we utilise information from more than 2 million job applicants per annum and the 200 000 jobs that they find each year, compared to the small sample utilised by Stats SA,” he said.
Brian Kantor, an investment strategist at Investec, said he supported Adcorp’s methodology. “We are nowhere close to identifying the employed outside formal employment. We do not know how many immigrants are working,” he said.
Kantor said there was no accurate measure for informal employment as the only measure was people in the formal employment sector.
“I hope the next census will help, if done properly.
“Trends in formal employment are not encouraging at all. Demand for higher wages and strike action lead to unemployment,” he said.
Source: Business Report