Employment Outlook: South Africa
by Mary Anne Thompson
With high unemployment, a growing skills shortage and the scars of apartheid still showing, South Africa struggles to accommodate its growing job sectors, according to Mary Anne Thompson, President and Founder of Going Global Inc. However, employers in certain industry sectors, including mining, oil and gas, renewable energy and tourism, report positive hiring intentions.
South Africa is a middle-income, emerging country with abundant natural resources. Much of its infrastructure is excellent. Many areas received extensive facelifts in preparation for the 2010 FIFA World Cup tournament. South Africa now boasts the continent’s first high-speed rail service and many world class hotels and restaurants. It possesses well-developed financial, legal, communications, energy and transport sectors.
But, South Africa is a land of enormous contrasts. Its unemployment remains stubbornly high at 24 percent, and economic problems inherited from the apartheid era, including poverty, lack of economic empowerment among disadvantaged groups and a shortage of public transportation, still exist.
About 65 percent of the country’s workers are employed in the services sector. Industry employs 26 percent of the workforce, and agriculture 9 percent. But those figures do not tell the whole story. According to The Centre for Development and Enterprise, a South African think tank, “Only 41 percent of South Africa’s working-age population participates in the economy, and there are only 5.9 million registered individual taxpayers.” Even worse, half the country’s youth are jobless. “This is a crisis. We call it a ticking bomb,” said Zwelinzima Vavi, general secretary of the labor federation, Congress of South African Trade Unions (Cosatu).
Areas of Job Promise
President Jacob Zuma has pledged to create 5 million jobs by 2020, but unemployment remains high and youth unemployment is dangerously high. The country’s economy has created 273,000 new formal sector jobs in the last two years. Moreover, new jobs are being created across industry sectors, with manufacturing being the only major sector continuing to show a deficit in new jobs.
In the past few months, employment has grown sharply, at the rate of 4.3 percent per year, according to the latest Adcorp Employment Index. The formal sector employment represents almost three-quarters of the gains, and Adcorp found employment in the transport, logistics and communication sector increased sharply. It also grew robustly in retail and wholesale trade and construction.
A recent survey of hiring trends by the global employment services firm Manpower is less optimistic though. Its survey reveals South African employers’ hiring plans continue to decline, sinking to the weakest level since the survey started six years ago. Manpower reports opportunities for jobseekers are expected to remain elusive, at least for the near term. Outlooks in five of the ten industry sectors and four of the five regions surveyed also weaken to the least optimistic levels reported since the survey began.
However, the good news is more than 80 percent of the employers surveyed intend to maintain current staffing levels. “On-going market volatility, negative market sentiment, and increased Eurozone tensions, continue to dog employment plans. Although there are a lot of positive indicators in the market for growth in Africa … employers are still hesitant to take the plunge before future growth plans are cemented and until the euro zone outlook improves,” Lyndy Boland of Manpower SA said. In addition, new legislation could make any temporary staff permanent, which makes employers hesitant to hire new talent.
Employers in five of South Africa’s ten industry sectors report positive hiring intentions. Hiring plans are strongest in the mining and quarrying and the agriculture, hunting, forestry and fishing sectors where employers in both are cautiously optimistic. In mining and quarrying, the modest optimism may be attributed to increased international interest in Southern Africa’s inland and offshore oil and gas. Employers in the construction and manufacturing sectors report the gloomiest forecasts.
Mining has suffered from a lack of skills for a while, according to Hay Group South Africa. This is especially true for engineering and technical disciplines. Shortages in these areas have led to increasing salaries and costs. The shortage shows no signs of abating any time soon. Mining.com reports although efforts are being made to remedy the shortage of engineers in South Africa’s coal industry, not enough is being done to meet demands.
Oil and Gas: The oil and gas industry is booming throughout Southern Africa. With the discovery of massive gas and oil reserves, Manpower reports industry growth is not being sustained by African skills. The shortage of skills and experience in the field means experienced professionals are being flown in from all over the world to fill the talent gap. A report by Ernst & Young forecasts 350,000 job possibilities will be created every year. The short supply of key figures such as engineers and geologists in addition to managerial and technical staff in South Africa means the industry could suffer critical setbacks, according to Maxeen Bremer, Manpower South Africa regional manager - Western Cape.
Renewable energy: The government aims to stimulate renewable energy and environmentally sustainable economic development and job growth in South Africa. And renewable energy will remain an integral part of South Africa’s energy mix for the foreseeable future, according to PwC, which predicts a great deal of foreign investment will flow into the country. The Department of Energy’s procurement program has already attracted developers, investors and engineering, procurement and construction contractors from around the globe.
Tourism: The government is working to grow South Africa’s tourism industry. The Department of Tourism has committed to creating 225,000 jobs and increasing tourism’s economic contribution to 499 billion ZAR by 2020.
Critical Talent Shortages
More than half of South African CEOs report it is becoming increasingly difficult to recruit workers and the shortage of skilled candidates is the most significant recruitment challenge. And although most South African CEOs are confident they will be able to access the talent they require in the next three years, they are “candid about the impact talent constraints have had on their companies’ growth and profitability in the past year,” PricewaterhouseCooper says.
According to a survey conducted by ManpowerGroup South Africa, the ten jobs in greatest demand include:
- Accounting and finance staff
- Skilled trades
- Sales representatives
- Doctors and other non-nursing health professionals
- Personal and administrative assistants
- Chefs and cooks
The Manpower survey also noted soft skills, such as good values or a suitable personality, were not fundamental to getting a job. Employers are apparently willing to overlook incompatibility in areas of high demand as long as candidates had the “hard skills” or work experience required.
Engineering: Although engineering was not listed by Manpower, it should have been. President Zuma has said South Africa will need at least 30,000 engineers in the future. In fact, it is estimated Eskon, South Africa’s electricity public utility, will need an additional 3,000 scientists and engineers and 24,000 artisans over a five-year period.
Accounting: South Africa has a shortage of accountants, especially black accountants, according to TheCareersPortal. In response to this shortage, programs have been developed to train prospective chartered accountants to meet the skills requirements of the accountancy field.
Human Resources: Demand for talented HR candidates seems to be on the rise, according to recruiter Michael Page International, with candidates who have a specialist focus particularly sought after. Employers are seeking candidates with exposure to areas such as remuneration and benefits, organizational development and talent acquisition. Michael Page expects to see ongoing high demand for skilled professionals throughout this year.
Managers and Professionals Wanted
Recruitment and retention of middle and senior management remains a major challenge. South African CEOs noted high-potential middle managers, senior managers and skilled workers are the most difficult to recruit and retain, according to Pricewaterhouse Coopers.
Hiring Challenges for CEOs
The Global Snapshot from recruiting firm Antal reports 53 percent of South African employers surveyed are currently hiring at managerial/professional levels; 59 percent expect to hire at the managerial/professional level over the coming quarter. At 19 percent, the percentage of organizations letting professionals and managers go is the lowest in Africa. Moreover, with firing expected to drop down to 15 percent, Antal expects South Africa’s employment market is set to grow as the year progresses.
Results from a survey of employers by the South African Graduate Recruiters Association (SAGRA) revealed the 81 organizations expected to increase the number of graduate vacancies this year by 7 percent. All ten industries tracked showed an increase in graduate vacancies for this year. However, the accountancy and professional services industry plans a very modest increase in graduate positions.
The research also found nearly three-quarters of employers expected to increase graduate salaries, and no organization reported plans to reduce new graduates’ salaries this year.
International accounting firm Grant Thornton reports South Africa compares favorably to the rest of the world, with 28 percent of senior management positions held by women. However, more innovation is needed to make significant progress. One of the solutions is South Africa’s ‘Gender Equality Bill,’ which is due to be presented this year. The bill proposes giving the government the power to force companies to appoint women to half of all top positions.
While South Africa still struggles to overcome the scars of apartheid, it is a growing economy with many jobs available to jobseekers across a variety of sectors. Its skills shortages and growing job sectors make the country a viable option for job seeking expats and South African nationals thinking about returning home.
Mary Anne Thompson is the President and Founder of Going Global, Inc. (www.goinglobal.com) a subscription database service that contains career and employment information for more than 80 locations. More than one million users enjoy Going Global’s unique content, which is researched in-country by local career experts and updated annually. She is also an author, lecturer and frequent guest on various media outlets, including NBC and CNN International. Previously, Mary Anne served as an attorney and advisor to President Ronald Reagan in the White House.