Why businesses in South Africa aren’t hiring – it’s exactly why you think

The ManpowerGroup has published its latest employment outlook survey, showing that South African employers report limited hiring intentions for the second quarter of 2020.

While 8% of employers forecast an increase in payrolls, 5% anticipate a decrease and 85% expect to make no changes.

Once the data is adjusted to allow for seasonal variation, the overall outlook for South Africa stands at +2%, unchanged from the previous quarter. Hiring plans remain relatively stable when compared with the previous quarter, but declined by 3 percentage points in comparison with the same period last year.

“As we enter into the second quarter of 2020, the South African economy continues to be affected by subdued economic growth and a sluggish growth outlook,” said Lyndy van den Barselaar, managing director of ManpowerGroup SA.

“Local businesses remain concerned about policy uncertainty, high unemployment rates, and continued load shedding. These factors are causing employers to proceed cautiously when it comes to their spending and hiring strategies.

“Further, while it is too early to predict the potential impact of Covid-19 on global hiring, the reality today is that unemployment remains low in many markets and organisations globally are still struggling to find people with the right skills,” said Van den Barselaar.

Regional comparisons

Employers in three of the five regions expect to add to payrolls in the second quarter of 2020.

The strongest labour market is anticipated by KwaZulu Natal employers, who report a net employment outlook of +7%. Limited job gains are also forecast in the Western Cape and Gauteng, with outlooks of +4% and +3%, respectively.

However, Free State employers report downbeat hiring prospects with an Outlook of -4%, while the Eastern Cape Outlook stands at -3%.

“Local and international tourism is expected to have a significant impact on hiring practices in the KwaZulu Natal region. The province has emerged as South Africa’s fastest-growing wealth market, which naturally spurs economic growth and therefore employment,” said van den Barselaar.

“Seasonally, the second quarter of each year often marks an influx of tourists, which could also positively affect employment in KwaZulu Natal and other tourism-oriented regions.

“A considerable portion of expected growth can be attributed to both national and international tourism, increased cargo movements, and investments into large-scale construction and infrastructure development projects.”

Free State employers report a slight decline of 2 percentage points when compared with the previous quarter, while the outlook strengthens by 5 and 2 percentage points in KwaZulu Natal and the Eastern Cape, respectively. Elsewhere, hiring prospects remain relatively stable in Gauteng and Western Cape.

In comparison with this time one year ago, Free State employers report a significant decline of 10 percentage points.

Hiring plans also weaken by 4 percentage points in Gauteng, by 3 percentage points in the Western Cape, and 2 percentage points in Eastern Cape. Meanwhile, the Outlook for KwaZulu Natal improves by 2 percentage points.

Sector Comparisons

Employers in five of the seven industry sectors expect to increase payrolls during the forthcoming quarter, the report shows.

The strongest hiring pace is forecast in the manufacturing sector, where the net employment outlook stands at +7%.

Production and other services anticipate modest growth, with an outlook of +5% in both sectors, with restaurants & hotels’ outlook at +3%, and wholesale & retail trade at +2%.

Meanwhile, employers in the construction sector and finance & business services sector expect to trim payrolls, with outlooks of -10% and -3%, respectively.

“With considerable international investment into production plants in, among others, the automotive and electronics industries, manufacturing is expected to be a key growth driver in employment opportunities,” said van den Barselaar.

“A number of seasonal industries within other production and other services, such as fishing and tourism, will also affect short-term hiring during this quarter. Alternative power generation has also been pushed to the forefront in South Africa, as a result of continued load shedding.

“This, alongside several large infrastructure investments that have been made or are in the pipeline, is expected to stimulate considerable economic investment, in turn growing employment in these areas,” she said.

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Why businesses in South Africa aren’t hiring – it’s exactly why you think