Economics & Labour

Job Outlook Bleak

Recent figures issued by government show 179,000 jobs lost in the first quarter of 2009.  The largest losses have been recorded in Retail (66,000) Financial Services (43,000), with Manufacturing holding up relatively better at 29,000.

These figures reflect the huge downturn in the growth rate over the same quarter, and suggest strongly that job losses overall will be at higher levels than we anticipated for 2009.  It is not clear if this data includes employees supplied by labour brokers, who would be the first to bear the brunt of the reduction.  We believe that it does include such labour, which does infer that there is some resistance to losing permanent full time core employees.  Much evidence suggests that employers use brokered labour as a means of creating labour flexibility, to respond to quick changes in the level of demand in their product market.

If  this is so, then it is possible that these jobs have not been lost permanently, but would resurface, albeit more slowly, as the economy turns.

Employers at present may effect such changes with brokered labour without resorting to the retrenchment provisions of S189 in the LRA.

This supports the view that these losses will reflect a large component of brokered labour, since retrenchment is a longer and a more difficult process.  It also has implications for wage settlements, which we discuss in our Wage Settlement Survey.