Financial services firm PwC expects there to be a significantly lower number of new jobs created in South Africa in 2023 compared to last year – while it expects the downward trend in the unemployment rate seen in 2022 to reverse and start pushing higher.
According to the group’s latest Employment Outlook Forecast, it expects only around 200,000 jobs to be added to the economy in 2023 in light of updated GDP growth forecasts.
PwC said that the pandemic job bounce-back period has ended, and overall economic growth has slowed – driving down the likelihood of the job market expanding.
As a result of sustained and damaging load shedding, PwC revised its growth forecasts to include a baseline scenario of 1.6% in 2023, an upside scenario of 2.0% and a downside scenario of 1.0%. These are all markedly lower than GDP growth in 2022, which was around 2.0% across the board.
The downsized projections from PwC are also higher than growth predictions from the South African Reserve Bank and economists, who see growth falling below 1% this year – also mainly due to the impact of load shedding.
What makes PwC’s projections particularly worrying is that the group is expecting South Africa to hit a turning point when it comes to unemployment as a result: despite adding 200,000 jobs, the economy isn’t growing fast enough to match the growing population and workforce.
Thus PwC’s baseline scenario for unemployment in South Africa marks a slow rise in the years to come following last year’s labour market recovery.
“There is certainly upside potential to the jobs growth outlook for 2023. However, the country’s labour market has not fundamentally changed compared to the pre-pandemic period in terms of the quality of skills and the nature of regulation,” said PwC. “As such, upside potential is limited.”.
The graph below illustrates the three possible employment scenarios for South Africa:
The latest employment data from Stats SA shows that South Africa’s narrowly defined official unemployment rate declined in the third quarter of 2022 to 32.9% – the third consecutive quarterly decline from a record high of 35.3% in the final quarter of 2021.
2022 saw significant employment gains during the first three quarters, PwC said – especially within non-agricultural employment – reaching 15.8 million jobs in total, a net increase of 1.2 million jobs.
“Stronger-than-expected economic growth certainly contributed to this improved jobs market situation while other supporting factors included greater resilience towards the impact of electricity load-shedding at a business level,” the group said.
Findings from the latest CareerJunction Employment Insights Report for November 2022 showed that recruitment activity – measured by online job postings – also increased by 9.0% y-o-y in October last year.
However, despite this progress, PwC said it is likely short-lived.
Over the next ten years, employment growth is expected to sit at 1.2% per annum, slower than the anticipated labour force growth rate of 1.5%.
To urgently combat this predicament, PwC said that the social compact between government, labour, the private sector and other stakeholders would need to prioritise skills development.
The social compact, set to improve employment in the country, was introduced in the second quarter of 2022 – however, it is yet to be implemented, with many stakeholders unable to find a consensus on big-ticket items.
A further update on the compact is expected in the next State of the Nation Address this year.
The graph below shows PWC’s growth predictions, which due to them being low, hampering employment:
The latest Employment Industry Report from the jobs portal CareerJunction showed that over the last two months in 2022, there was a 6% decline in hiring activity.
Despite the decrease, the company said that there were a handful of skills that are high demand at the start of this year, namely the following:
- Electrical engineering
- Architectural and other engineering skills
- Construction work
- Site management
- Project Engineering
Information Technology skills also have remained a hot commodity for domestic companies, with data scientists and IT specialists frequenting the CareerJunction Employment Industry Reports often.