Manufacturing sector faces employment drop-off

Lesotho’s manufacturing sector’s total employment diminished by 6.3 percent in the third quarter
of 2024 compared to the previous quarter, according to a report released this week by the Bureau of Statistics.

The report says the largest contributor to this shrink was “Other Manufacturing,” industry, which saw a 10.1 percent decline in its workforce.

Despite the decrease in employment, wages and salaries increased by 2.9 percent quarter-on-quarter, with the average monthly wage reaching M3,386 during this period.

According to the report, year-on-year, wages and salaries in the manufacturing sector showed robust growth, increasing by 17.2 percent in the third quarter of 2024. The “Other Manufacturing” and “Leather and Footwear” industries were primary drivers of this growth, with increases of 151.5 percent and 49.2 percent, respectively.

“Manufacturing sector recorded an overall 17.2 percent year-on-year increase in average monthly wages and salaries in the third quarter of 2023, reaching M3,386. This growth was driven by strong performances in industries such as Leather & Footwear, which saw a remarkable 49.2 percent annual increase, and Textiles & Clothing, which rose by 11.7 percent. However, Food & Beverages experienced a 3.5 percent decline in average earnings compared to the same period in 2023.

“Quarterly comparisons (Q2 to Q3 2024) show an increase in average wages across most
industries, with Leather & Footwear leading at 114.8 percent, followed by Textiles & Clothing at 10.3 percent, and Other Manufacturing at 14.7 percent. In contrast, wages in the Food & Beverages industry fell by 6.0 percent during the same period,” it says.

The data further shows that the Leather and Footwear industry experienced a consistent increase in its share of wages, rising from 30.4 percent in July to 38.2 percent in September.

Similarly, the Food and Beverages and Textile and Clothing industries saw their highest wage shares in September, at 37.4 percent and 36.9 percent, respectively.

The Other Manufacturing industry, on the other hand, displayed a peak in August at 35.3 percent, followed by a slight decline to 35.1 percent in September. Across all industries, the percentage distribution of wages and salaries reached its highest point in September at 36.9 percent, reflecting operational factors influencing remuneration patterns during this period.

The report further indicates that the number of employees has steadily decreased each quarter, from the third quarter of 2023 to the first quarter of 2024.

However, there was a slight increase in the second quarter of 2024, suggesting a temporary improvement in labour engagement. During the second quarter to the third quarter of 2024, there was a huge decline in employment. The industry’s employment figures have plummeted due to business closures caused by lack and deteriorating orders from buyers, as well as the use of short-time employment contracts.

The Bureau of Statistics has embarked on a programme of quarterly economic or enterprise
surveys on medium and large-scale enterprises, namely: Wholesale and Retail Trade, and
Survey of Performance of Manufacturing Sector. The latter’s report focuses on the following
topics: type of establishment; legal form; type of ownership; employment; sex of employees; industry; and remuneration (wages and salaries).
The quarterly survey provides estimates on various variables of interest in the medium and
large manufacturing activities.

Employment in manufacturing sector in Lesotho has mainly been dominated (about 80 percent) by “Textiles and Clothing” industry throughout the years.

Leather and Footwear, Food and Beverages, and Other Manufacturing are also playing a notable role in the manufacturing sector. However, they still have a very low constant absorptive capacity.