Public sector staff expands and retail jobs disappoint
Statistics South Africa (Stats SA) reported on February 11 that South Africa’s unemployment rate was unchanged at 29.1% during the fourth quarter of 2019. With this reading, South Africa has the fourth-highest unemployment rate out of 182 countries tracked by Trading Economics, after Namibia, Bosnia & Herzegovina and Angola. Note that the National Development Plan (NDP) aimed for an unemployment rate of 14% by 2020. This gives President Cyril Ramaphosa a lot to answer for when he delivers his State of the Nation Address (SONA) on February 13.
The South African economy created a net 117,000 formal sector jobs in 2019Q4. While employment declined in, for example, manufacturing and utilities, community and social services – broadly government employment – climbed by 113,000. This will be a tough nut to chew on for Finance Minister Tito Mboweni when he delivers his Budget Speech 2020. There is significant pressure on the state to cut back on its staff costs and the increase in community and social services payrolls late last year will do little to assist the National Treasury in balancing the government’s books.
A point of concern is the 159,000 jobs lost in the (wholesale and retail) trade sector. The fourth quarter usually sees an increase in retail employment – and an accompanied decline in the unemployment rate – as retailers increase staff for the November (Black Friday) and December (holiday) shipping periods. The decline in retail employment reflects weak confidence amongst retailers and consumer confidence back in negative territory. Another concern is the 77,000 jobs lost in the informal sector – these are often jobs on the margin of the economy, affecting the poorest of the poor.
The latest Stats SA employment data is released nearly 13 months after the government’s Jobs Summit and 17 months after the release of President Ramaphosa’s economic stimulus and recovery plan. Clearly, neither endeavour has had a real positive impact on the country’s employment creation. The latest unemployment rate does not reflect the “steady progress in addressing some of the main impediments to job creation” that the president referred to in December 2019 after a meeting of the Presidential Working Committee on Jobs.
The 2019 edition of the World Economic Forum (WEF) Global Competitiveness Report once again reflected a key challenge for South Africa’s unemployment problem: the lack of sufficient and appropriate skills amongst its labour force. The report ranked the skills of the South African workforce as 1o1th out of 141 countries – i.e. in the bottom third of economies assessed. The skillset of graduates ranked 102nd while the digital skills among the active population ranked a dismal 126th. Due to these issues, the ease of finding skilled employees also ranked poorly at 98th.
On a positive note, the recently released PwC 23rd Annual Global CEO Survey found that 50% of South African CEOs believe their organisations are making progress in establishing upskilling programmes that develops workers’ soft, technical and digital skills. The WEF ranked South Africa 40th out of 141 countries for the extent of staff training – reflecting positively on local companies’ investment in training and employee development. CEOs should prioritise education and upskilling for the future to enable their workforce to succeed.
President Ramaphosa will speak about employment and skills in his SONA this week. In the previous SONA (delivered in June 2019), he referred to the high youth unemployment rate as a “national crisis that demands urgent, innovative and coordinated solutions”. The president should update the nation this week on progress regarding his SONA 2019 pledge for a comprehensive plan - driven and coordinated by the Presidency - to create two million new jobs for young people over the next decade. It is indeed a crisis requiring solutions.
By Lullu Krugel, Chief Economist Strategy& PwC, and Dr Christie Viljoen, Strategy& PwC Economist
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