Women in the workforce
The release of the 2Q23 employment data (a household-based survey) showed that momentum in quarterly employment gains was sustained, with the labour market adding 153 914 jobs in that quarter. Despite economic and socio-economic challenges, the labour market has added around 2 064 186 jobs since 4Q21. Meanwhile, the unemployment level has increased by 277 885. However, with a growing population and lacklustre economic growth, the official unemployment rate remains stubbornly high at 32.6% in 2Q23 (from 32.9% in 1Q23), reflecting a 9.4 percentage point cumulative increase since 1Q08 (Figure 1). To gain additional insight from the data, we examine two aspects: sectors that have contributed the most to the over 2 million cumulative job gains and, importantly, gender-based employment dynamics which are critical, particularly in the local context. In other words, what does the data say about the participation of women in the economy.
4Q21 to 2Q23: all sectors, bar the private household, have added jobs unevenly
The cumulative job gains recorded over the past seven quarters reflect broad-based employment creation across all sectors except for the private household sector, which exhibits signs of stress amid mounting cost-of-living pressures. Zoning into the sectors that have contributed to these net job gains, the distribution is uneven yet critical given the prevailing economic conditions (Figure 2). Notably, the most significant contribution emanates from the community and social services sector, contributing 37.5% (or 774 005) to the net job gains over the past seven quarters. The trade1 sector has contributed 28.3% (or 583 333 jobs), and the Finance2 sector 10.3% (or 212 978). Intriguingly, women accounted for only 39% of these net job gains, with their male counterparts accounting for the difference.
Gender employment dynamics: women's participation still unsatisfactory
The official unemployment rate for women stood at 35.7% in 2Q23, reflecting an increase of 0.3 ppt from the previous quarter. Meanwhile, that of their male counterparts decreased by 0.7 ppt to 30.0% in the corresponding quarter. On average (between 1Q08 and 2Q23), the unemployment rate for women was 4.2% higher than that of men. Women's labour force participation rate has averaged 51.1% since 2008, while the participation rate for men averaged 64.3%.
By occupation, the data shows that women are overrepresented in relatively low-quality, low-paying, and vulnerable professions such as domestic workers, clerks, and some technician occupations (Figure 3). In contrast, women are grossly underrepresented in higher quality jobs such as managerial occupations where, on average (1Q08 to 2Q23), there have been 480 579 fewer women than men. This is consistent across other occupations such as sales and services, where the average deficit is 139 122, and professional occupations, where the deficit is 40 110. Figure 4 provides additional insight regarding relative gender (in)equality by sector and that the services sectors are comparably gender equal. In contrast, sectors such as construction, mining and transport are far from gender parity.
Contextually, 42.2% of households are headed by women, and these gender gaps have broader socioeconomic implications. Encouragingly, women have taken steps to uplift themselves academically. Educational enrolment trends by gender show that more women are enrolled compared to men (Figure 5) in public higher education institutions. Additionally, there were more female than male graduates across all qualification types, except doctorate degrees in 2021 (Figure 6). This implies that factors limiting more women employment are not supply-driven.
Growth implications
Overall, despite the economy confronting elevated unemployment rates across the gender spectrum, women are often disproportionately affected and grossly underrepresented in critical occupations. The IMF study3 found that gender diversity is critical for boosting productivity growth because women and men bring different skills and perspectives to the workplace, as well as different attitudes to risk and collaboration. Through analysing macroeconomic sectorial and firm-level data, the study demonstrated that women and men complement each other in the production process, generating additional economic benefits, including productivity gains. These can be achieved by enhancing women participation in the workforce.
Week in review
The Quarterly Labour Force Survey (QLFS) data (not seasonally adjusted) showed that the official unemployment rate fell slightly to 32.6% in 2Q23 from 32.9% in 1Q23. This moderate fall is overshadowed by unemployment remaining stubbornly high and above the pre-pandemic average of 25.5%. Despite prevailing economic weakness, the formal-sector-led recovery in employment continued, with the economy adding 153 914 jobs in 2Q23 and over 2 million jobs since 4Q21. However, jobs were still below the pre-pandemic 4Q19 level by about 74 075. The domestic economy is expected to stagnate at 0.2% this year, posing downside risk to the ongoing labour market momentum. Furthermore, growth gradually rises to only 1.8% by 2025, undercutting the kind of expansion required to generate sufficient employment gains to reduce the unemployment rate amid a growing population.
Retail sales volumes declined by 0.9% y/y in June, although at a slower pace compared to the downwardly revised decline of 1.6% in the previous month (revised from -1.4%). On a month-on-month basis, however, seasonally adjusted volumes recovered somewhat, by 0.2%, following a decline of 0.9% m/m in May (revised lower from -0.7%). The marginal lift was likely supported by the unexpected load-shedding reprieve and the near R1 fuel price relief in June. Nevertheless, volumes contracted by 1% compared to the previous quarter, signifying that the retail industry will detract from 2Q23 GDP growth, in contrast to the energy-intensive mining and manufacturing sectors, that will likely contribute positively to growth in that quarter. This underscores the challenging consumer backdrop, characterised by high debt and living costs, as well as suppressed consumer sentiment.
Week ahead
On Tuesday, the leading business cycle indicator for June will be published. The leading indicator declined by 1.7% m/m in May, after falling by 1.0% in April. Six of the ten available constituent variables contributed to the decline, the largest contributors being a decrease in residential building plans approved, as well as the dollar-denominated index of South Africa's export commodities. The most significant positive contributions were from a wider interest rate spread and accelerated trend growth in real M1 money supply. The indicator has fallen by 10.2% compared to May 2022, primarily due to a higher base, marking fourteen consecutive months of decline. At current levels, we assess the leading indicator as signalling an elevated probability of significantly subdued (or recessionary) economic outcomes.
On Wednesday, data on consumer inflation for July will be released. Headline inflation fell to 5.4% y/y (0.2% m/m) in June, from 6.3% in May, mainly reflecting continued positive base effects from last year's high inflation. Core inflation was 5.0% y/y, down from 5.2% last month, and monthly inflation of 0.4% was driven by housing. Fuel prices fell by 3.1% m/m and by 8.3% compared to last year. Food and NAB inflation was 11.0% y/y, down from 11.8% previously, but monthly price pressures of 0.5% prevailed. We predict headline inflation of 5.0% y/y in July, still supported by base effects, but monthly inflation of 1.2% will be driven by a lift in utility costs as well as a continued passthrough of elevated operating cost pressures. We anticipate that headline inflation will likely average around 6.0% this year before sustainably reverting to target on a protracted basis over the forecast horizon.
Tables
The key data in review
| Date | Country | Release/Event | Period | Act | Prior |
|---|---|---|---|---|---|
| 15 Aug | SA | Unemployment rate | 2Q | 32.6% | 32.9% |
| 16 Aug | SA | Retail sales %m/m | Jun | 0.2% | -0.9% |
| SA | Retail sales %y/y | Jun | -0.9 | -1.6 |
Data to watch out for this week
| Date | Country | Release/Event | Period | Survey | Prior |
|---|---|---|---|---|---|
| 22 Aug | SA | Leading business cycle indicator | Jun | -- | 108.4 |
| 23 Aug | SA | Headline CPI %m/m | Jul | -- | 0.2% |
| SA | Headline CPI %y/y | Jul | 5.0 | 5.4% | |
| SA | Core CPI %m/m | Jul | -- | 0.4% | |
| SA | Core CPI %y/y | Jul | 4.9 | 5.0% |
Financial market indicators
| Indicator | Level | 1W | 1M | 1Y |
|---|---|---|---|---|
| All Share | 74,375.22 | -4.3% | -3.7% | 4.8% |
| USD/ZAR | 19.07 | 1.1% | 5.7% | 14.5% |
| EUR/ZAR | 20.72 | 0.1% | 2.2% | 22.3% |
| GBP/ZAR | 24.31 | 1.7% | 3.1% | 21.1% |
| Platinum US$/oz | 896.89 | -1.5% | -8.5% | -3.3% |
| Gold US$/oz | 1,889.43 | -1.2% | -3.4% | 7.2% |
| Brent US$/oz | 84.12 | -2.6% | 7.2% | -10.2% |
| SA 10 year bond yield | 10.39 | 2.8% | -0.4% | 2.5% |
FNB SA Economic Forecast
| Economic Indicator | 2021 | 2022 | 2023f | 2024f | 2025f |
|---|---|---|---|---|---|
| Real GDP %y/y | 4.7 | 1.9 | 0.2 | 1.0 | 1.8 |
| Household consumption expenditure % y/y | 5.8 | 2.5 | 1.2 | 1.1 | 1.1 |
| Gross fixed capital formation % y/y | 0.6 | 4.8 | 4.2 | 3.1 | 4.2 |
| CPI (average) %y/y | 4.5 | 6.9 | 6.0 | 5.2 | 4.8 |
| CPI (year end) % y/y | 5.9 | 7.2 | 5.3 | 4.8 | 4.8 |
| Repo rate (year end) %p.a. | 3.75 | 7.00 | 8.25 | 7.50 | 7.00 |
| Prime (year end) %p.a. | 7.25 | 10.50 | 11.75 | 11.00 | 10.50 |
| USDZAR (average) | 14.80 | 16.40 | 18.50 | 18.00 | 17.50 |
