Chapter Five Media Article SA's Employment Rate Improves

link: http://www.southafrica.info/doing_business/businesstoday/businessnews/732588.htm

Summary:

The South African unemployment rate had declined to 25.5 percent in September 2006, down from 26.7 percent in September 2005. The results of the labour force survey done in September last year shows us that 4 391 000 people were unemployed, compared to 4 487 000 people who were unemployed in September 2005. The country's absorption rate, the percentage of the population of working age who were employed, are steady at 42.7 percent with the number of people employed at 12 800 000 and the labour force participation rate at 57.3 percent. The trade industry including wholesale and retail has made the single largest contribution to total employment with 3 055 000 people employed or 23.9 percent. Community and Social Service made the second largest contribution with 18.1 percent and manufacturing the third largest with 13.6 percent. The downwards trend of employment in the agriculture sector was reversed with the industry contributing 163 000 new jobs to the market. Stats SA said subsistence farming has become an increasingly important source of employment in South Africa. One in every three of the 500 additional jobs was in agriculture, Stats SA said. Elementary work dominated employment opportunities with one in every five employed people doing such jobs. However, the three highest occupation levels were managers, professionals and technicians, together accounting for 21.1 percent of the total employment. In September 2006, formal sector employment excluding agriculture accounted for 65.8 percent of total employment. Non-economically active people amounted to 12 815 000 of whom 9598 were not available to work and 3 217 000 were discouraged about not finding work or people who did not take active steps to seek employment.

Related to chapter:

In Chapter Five, Economic Indicators, talks mostly about unemployment rate. Unemployment rate is the percentage of the labour force that is not employed yet is seeking for a job. It is a really good indicator for measuring economic activity. Unemployment rate varies by age, sex and province. An economy having a high unemployment rate tells us that our economy might be in danger if the employment rate keeps rising. In order to prevent from that happening, solutions are illustrated below in the article. Unemployment rate could be calculated by taking the number of unemployed people over the labour force.

Personal Reflection:

An economy with a high rate of unemployment could lower its unemployment rate by doing the following. You could employ a lot of people in a certain industry that requires a huge amount of workers. You could provide more jobs opportunities for people who are unemployed. Having a low unemployment rate doesn’t mean it is positive effect to the economy. For example, unemployment rate may lead to a positive and a negative effect to stock markets. First, lower unemployment rate signals a strong economy, higher potential profits and that's good for the stock market. Second, lower unemployment may increase expected inflation and lead to higher interest rates that are bad for the stock market. Third, lower unemployment rate may lead to higher wage inflation that is bearish for the stock market.