South Africa’s unemployment rate is one of the highest in the world – but companies struggle to hire for these jobs

Data published by Statistics South Africa at the end of March shows that the country’s official unemployment rate rose 0.4 percentage points to a record 35.3% in the fourth quarter of last year.

Analysts forecast that the country’s jobless rate is now edging towards the 40% mark as the country is unable to absorb younger workers into the labour force.

Despite this, several South African companies have raised concerns that they are struggling to hire right now as they are unable to find the necessary skilled workers. This can be attributed to a massive skills mismatch in the country, credit rating agency Moody’s said in a note this week.

“Of 30 emerging market economies, South Africa had the largest share of mismatched workers, at more than 50% of the total, and the lowest productivity levels, according to Boston Consulting Group. The OECD forecasts that unemployment will not fall below the 30% threshold before the end of 2023,” Moody’s said.

“Low education levels and obstacles in hiring foreign workers weigh on the supply side of the labour market as companies struggle to find qualified workers. On the demand side, strong labour unions and wage-bargaining arrangements that lack cross-sector coordination also drive up wages.”

Moody’s noted that the government has tried to support employment through a number of initiatives, such as a new mining charter, the Black Business Supplier Development Programme and the Youth Employment Service programme, which could generate cyclical improvements.

“However, the government does not plan to introduce reforms that institutions including the IMF estimate would generate material, longer-term gains, such as changes to collective bargaining arrangements, better regulation of product markets, more careful minimum wage setting and less stringent employment protection legislation.

“The ruling African National Congress’s strong links with worker’s unions make such reforms particularly unlikely,” it said.

Skills canyon

One of the biggest areas where this mismatch is most evident is in skilled IT and tech jobs.

Robin Fisher, emerging markets senior area vice president at Salesforce, noted South Africa’s digital skills gap has steadily changed from a valley to a canyon over the last few years, with many graduates lacking the basic and critical skills needed in the workplace.

Fisher said that the country recorded a skills mismatch of over 50% in 2019, with the skills challenges likely further exacerbated by the pandemic. He noted that companies within the South African tech sector were finding it hardest to fill vacancies in positions that included:

• Software developers;
• Computer network technicians;
• Developer programmers;
• Computer network and systems engineers.

“It’s not just the ICT sector that isn’t able to meet key digital skills demands. Organisations across industries are struggling to find the right digital skills needed to enable digital innovation, support recovery from the economic impact of the Covid-19 pandemic, and drive future growth.

“Even everyday digital skills covering expertise in areas such as smartphone usage, website browsing, social media and productivity programs like Word, Excel, and Google Docs are in short supply, not just in South Africa but across the globe,” he said.

This aligns with recent comments by Capitec chief executive officer Gerrie Fourie who noted that South Africa is seeing a ‘war for talent’ as banks, retailers and other businesses are fighting to hire from a very limited talent pool. Fourie said that this is most keenly felt in highly-technical professions such as data science and IT workers.

“This is being fueled by people saying they are now working from home and overseas. It’s quite easy to work in London but you actually sit in South Africa, so I think there will be quite a war for talent,” he said.

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