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Cablegate: Employment Comparisons Hit Press

This record is a partial extract of the original cable. The full text of the original cable is not available.

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

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