South Africa: Battling unemployment

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The local economy is struggling to overcome twin hurdles – an inflated unemployment rate that siphons off state funding for social services and a lack of skilled workers to fill the many positions that are currently vacant.

On March 19, Statistics South Africa (Stats SA) issued its employment report for the last quarter of 2012, showing there had been a 0.3% rise in employment numbers, with some 22,000 positions added to the formal, non-agricultural sector. This took the total employment figure for the sector to 8.46m, with the rise continuing a trend over the preceding three quarters, creating around 82,000 jobs.

The increased pace of hirings did not make a significant impact on the unemployment rate, however, which edged down to 24.9% at the end of 2012 from the 25% recorded in the third quarter. Youth unemployment, covering jobless South Africans aged 15 to 24, remains far higher, accounting for around one-half of this age bracket, and it is estimated that up to 4.5m people are actively seeking work.

There were also concerns that the increase in employment in the final quarter of 2012 could be reversed. Many of the new jobs added in service sectors, such as hospitality and tourism, are traditionally more active in the late spring and summer months, but are prone to shedding jobs as the weather cools.

Merina Willemse, an economist with the Efficient Group, a local financial services firm, says the way to ease unemployment is to address another of the economy’s concerns, the skills deficit. “Jobs growth has not been sustainable thus far and there is not much guarantee that it will be sustainable,” Willemse told Business Times on March 20 after the employment figures came out. “The focus should really be on skills development. This is the only way to create jobs, given that our economy is not growing strongly.”

According to a report prepared by international consultancy firm Grant Thornton, the skills deficit in South Africa is widening, with the gap likely to impact economic growth in the future. The study, which was released in mid-March, said 83% of South African businesses reported a shortage of technical skills when it came to recruitment. This was well above the 61% average of the other BRICS member countries, Brazil, Russia, India and China, or the global average of 64%.

Ian Scott, the CEO and managing partner at Grant Thornton’s Cape Town branch, said that some of the largest sectors were among those struggling to bridge the skills gap. “When the data is split according to sector‚ we note that South Africa’s mining industry is finding the shortage of technical skills the most challenging‚” Scott said on March 18. “South Africa urgently needs to address the enormous dichotomy between the skills shortage and unemployment.”

The lack of skilled personnel is also hurting the construction industry, according to Werner Franck, managing director of Vertias, a construction management and property services firm.

“With an increasing number of small and medium-sized enterprises emerging in the construction sector, it becomes increasingly challenging for authorities to regulate the level of skills and training of the country’s construction workforce,” Franck wrote in an article carried by trade daily Bizcommunity on March 4. “Added to this is a lack of skills at management level, where a shortage of skilled project managers often has significant consequences for building projects.”

Eddie Majadibodu, chairperson of the National Skills Authority (NSA), an agency of the Department of Labour tasked with helping to develop strategies to boost skills levels in the workforce, said more emphasis had to be put on providing skills that were in demand by the labour market.

“We should now be able to identify the new labour trends in the information technology, finance or agriculture industries. We will then have enough time to develop the people,” Majadibodu told The New Age in early March. “We need career guidance for youth on several scales to identify what the economic shift will be. We have to guide the youth where the scarcity in the labour market is in order for them to find jobs.”

South Africa is making headway in this regard and is working to identify new avenues for training up skilled staff, according to Hlengiwe Mkhize, the Deputy Minister of Economic Development. “It is a challenge that we are now giving a lot of attention as a country,” she said on March 27.

Speaking on the sidelines of the 5th BRICS (Brazil-India-China-South Africa) Summit in Durban in late March, Mkhize said South Africa would borrow from Brazil’s model to help bridge the skills gap, citing that country’s network of state-funded technical institutes, a contributing factor in the Brazilian economy’s recent growth and rapid industrialisation.

While growth is expected to remain sluggish in 2013, the South African economy is forecast to gain momentum in 2014, with GDP tipped to increase by 3.4%. However, this rate of growth may not be enough to lower unemployment figures; many estimates say the country needs to see at least 6% growth for that to happen. Nevertheless, if the country is to shorten the jobless queues, some skilful bridging of the talent gap will be needed.

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