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Adcorp: Red tape behind huge job losses

Adcorp announced on Monday that over 37,000 jobs were shed in July.

Adcorp announced on Monday that over 37,000 jobs were shed in July. Picture: Aletta Gardner/EWN

JOHANNESBURG - The Adcorp Employment Index on Monday reported a sharp fall in employment during July.

The statement claims the economy shed 37,288 jobs, the third-worst monthly performance since the 2009 global financial crisis.

Labour Economist at Adcorp, Loane Sharp, told Ray White on 567 CapeTalk/Talk Radio 702's The Money Show on Monday night that the drop formed part of a trend in 2013.

"For most of 2012, it looked like the labour market was gradually recovering and then suddenly, in 2013, we've been hit by successive months of really weak reports."

He warned that one of the most significant revelations of the data was that the drop wasn't limited to one or two specific sectors within the economy.

"The data is very generalised in July, meaning it's spread out across the economy and not confined to individual sectors. That's always a worrying sign because normally you'd find a mixed bag of some sectors doing better and others doing worse."

Sharp speculated that one of the major reasons for the drop was that unions and the regulations they help push through can be too powerful, saying, "The labour market continues to be the tail that wags the dog."

He also said Reserve Bank Governor Gill Marcus may be succumbing to political pressure, saying she "indicated quite firmly and just out of the blue that labour market reforms are needed to boost employment."

"I think there's a story behind her statement."

He also speculated that the Tripartite Alliance - made up of the ruling ANC, the Congress of South African Trade Unions (Cosatu) and the South African Communist Party (SACP) - is seeing difficulty as well.

"Cosatu's membership is under pressure; in the private sector, unionisation is now just 15 percent of the total workforce and Cosatu is now essentially a public sector union, representing government civil servants."

Sharp argued that many regulations have negatively affected employment by putting pressure on small businesses.

These, he said, account for a large majority of workers in the country, with businesses that employ less that 50 people employing two thirds of the working labour force.

He cites the South African Revenue Service (Sars) and the Department of Labour as being overly aggressive against small enterprise.

"Unfortunately, the amount of bureaucracy and red tape that has been added to small businesses over the years is just strangling them."

Big business, he says, is well represented in government while smaller companies struggle to exert any influence.