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 19 June 2000 Unemployment Stable as Wages Policy Helps Maintain Demand Comment by the Chamber Chief Economist, Ian Perkin, on the unemployment and underemployment numbers for March-May 2000, issued today. The private sector's strategy of holding nominal wages while the recession passed is now paying handsome dividends in increasing employment and declining unemployment across most of the SAR economy. As the Government figures out today showed unemployment in the March-to-May three months declined to 5.1 per cent from 5.5 per cent in the previous February-to-April period, with the unemployed numbers down to 177,000 from 190,000. With the economy recovery and nominal wages held to 1998 levels, the number of employed increased in the latest three-month period to 3.38 million from 3.36 million in the preceding three months. At the same time, continuing consumer price deflation has, in fact, meant that employees have gained despite the nominal wage freeze because purchasing power of existing wages have increased as prices have fallen. Unfortunately the decline in the number of unemployed was offset slightly by another rise in those members of the workforce described as "underemployed", but this was mainly due to a short-term increase in the highly cyclical construction sector. Underemployed persons are those described as having involuntarily worked less than 35 hours in their most recent seven days of employment. The tough task on the employment front may be ahead, however, with the improvement so far being due to the rapid rebound of the economy, as well as the ability of the private sector to hold wage increases to a modest rate. With such a rebound it would be unreasonable not to expect some improvement in employment prospects. The real test now will be bringing unemployment down further as building on the economic rebound becomes tougher. Much will depend on the ability of the economy to continue to grow more rapidly, despite higher interest rates, uncertainties in the equity markets and concerns about the ability of external demand to increase trade in goods and services.
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