Employment outlook 'negative until 2010' in South Africa
The employment environment in South Africa is "clearly negative" and it has deteriorated markedly in the last few months. This is the conclusion of a report just released by Adcorp, South Africa's largest private employment agency, which expects the trend to continue until the second half of next year.
The Adcorp Employment Index for the March to June trimester shows a quarter-on-quarter decline of 12.9%, directly linked to the 17.1% fall in macro-economic activity and to a 5.7% drop in the demand for labour. Year-on-year the index shows a 21.6% decline and is currently at the same levels as the first quarter of 2005. "The South African economy has stopped growing and it is at its deepest decline since 1994," explains the report, and this is having an effect on both employment and remuneration trends.
Some robust sectors such as construction and logistics are bucking the trend, largely due to the build-up to the 2010 World Cup. The financial services sector, alongside mining and manufacturing, is included in the list of sectors that are "under substantial strain and show employment losses."
However, even though the financial sector has had its share of job losses and the outlook is uncertain, "there are however certain skills that remain in high demand, particularly in financial services. Shortages still exist," says Richard Pike, chief executive of Adcorp Holdings. "It's not total doom and gloom just yet, but we are dangerously close to being in a quite a negative situation."
Despite the South African unions' relentless pressure for higher wages, the remuneration index is also down 5.6%, a reflection of "the pressures on the South African economy translating into pressure on remuneration trends," says the report. The workforce is divided in two, according to Adcorp: one group is experiencing a salary freeze and does not expect wage increases at all this year. The other group is getting salary increases of "between 8 and 9%, but they are expected to decline to between 6 and 8% by the end of 2009, in line with the consumer price index."
