EMPLOYMENT COMPARISONS HIT PRESS

UNCLAS PRETORIA 003174 SIPDIS DEPT FOR AF/S/JDIFFILY; AF/EPS USDOC FOR 4510/ITA/MAC/AME/OA/DIEMOND TREASURY FOR OAISA/BARBER/WALKER/JEWELL USTR FOR COLEMAN LONDON FOR GURNEY; PARIS FOR NEARY E.O. 12958: N/A TAGS: ECON ELAB KTDB SF SUBJECT: EMPLOYMENT COMPARISONS HIT PRESS Summary -------------- ¶1. (U) Users of South African employment data should be aware of certain statistical anomalies. Poor statistical design in 2000 and 2001 caused formal employment to be grossly underestimated in those years. In 2002, these design flaws were corrected and formal employment was estimated to be 1.5 million higher than the previous year. Nonetheless, a South African Reserve Bank (SARB) publication in June 2004 included a labor market study showing that formal employment actually declined from 5.1 million in 1980 to 4.7 million in 2001. "The Economist" picked up on this faulty statistic and included it in an article entitled "South Africa's Economy, Tack to the Left" in the July 3rd-9th 2004 issue. This cable is meant to correct any confusion that this may have caused. End Summary. ¶2. (U) In "South Africa's Economy, Tack to the Left" in the July 3rd-9th 2004 issue of "The Economist", the author cited a SARB study on South African employment over the past 20 years showing more formal sector jobs in 1980 than in 2001. In short, drawing this conclusion on faulty data was a mistake. The Economist should have noted that the author of the labor market study had pointed out problems with the data, explaining that his purpose was to analyze employment trends by industry, rather than increases or decreases over time. The labor market study indicated formal nonagricultural employment declining from 5.1 million in 1980 to 4.7 million in 2001 -- a drop of 400,000 jobs while GDP growth averaged 1.7 percent. ¶3. (U) The author of the "The Economist" article also did not know that immediately following the release of the SARB collection of labor market studies, Statistics SA published a rebuttal challenging the use of the 1980 and 2001 data to analyze overall changes in formal employment. The rebuttal explained that the figures from the 2000 and 2001 surveys were released as discussion documents rather than official surveys because of poor statistical design. When the employment series resumed in 2002, about 1.5 million more individuals were counted as employed in the formal non-agricultural sector. Moreover, 1980 data used for comparison purposes excluded employment in the homeland areas. Users of South African employment data should be aware of these statistical anomalies. HUME