Alarm bells for jobs in South Africa
Jobs portal CareerJunction has published its latest employment insights report, showing that hiring activity is declining as of Q2 2024, with experts point to South Africa’s tough economic climate and systematic challenges as the main culprits.
The quarterly CareerJunction Employment Insights Report analyses supply and demand trends in the online job market to represent online labour dynamics in South Africa.
According to the report, Hiring activity in Q2:2024 saw a slight uptake of +5% compared to Q1:2024.
Year-on-year, however, the number of vacancies has declined by 7.2%.
Over the past two years (Q2:2022 to Q2:2024), hiring activity has declined by -5.5%.
This is despite a slight uptick in recruitment activity in the second quarter of 2024; hiring activity has been relatively slow in the first half of 2024.
CareerJunction noted that four sectors saw year-on-year declines or no positive movements in hiring activity, which included:
- IT roles (-21%).
- Admin, Office & Support roles (-13%);
- Business & Management roles (-3%);
- Finance roles (0%).
CareerJunction noted that recruitment activity for Admin, Office & Support roles has been slow over the last 4 quarters.
It also said that despite the continuous decrease in hiring activity for IT roles, demand for IT professionals remains very high in the recruitment market, which is a good sign.
Additionally, it added that finance roles have remained relatively stagnant year-on-year.
While CareerJunction didn’t mention the reasons for the decline in hiring activity, recent reports list some of the main culprits.
According to Stats SA’s latest Quarterly Labour Force Survey, South Africa’s unemployment rate has increased to 32.9%.
The unemployment rate, according to the expanded definition, also jumped by 0.8 of a percentage point to 41.9% in Q1 2024.
Employment losses were recorded in the community and social services (122,000), construction (106,000), finance (50,000), and utilities (17,000).
More concerningly, the data shows a 45.5% unemployment rate among young individuals (aged 15-34 years).
Stat’s SA highlighted that a lack of adequate education due to inequalities is one of the main culprits aiding this unemployment.
“A person’s chances of landing and keeping a job are also greatly influenced by their level of education.
“Limited educational attainment, as well as social and economic disadvantages, are the primary factors driving elevated rates of unemployment, and the significant proportion of youth not in employment, education, or training (NEET), in South Africa,” it said.
Compared to those without matric, those with tertiary education have a greater chance of transitioning from unemployment or inactivity into employment.
In response to South Africa’s dismal employment numbers, some economists have also said South African businesses have been hiring less due to a combination of increased union demands for wage hikes, low economic growth, high interest rates, and persistent load shedding.
Unions have become more vocal in advocating for higher wages to combat rising living costs.
However, these wage demands have placed additional financial pressure on companies already struggling with stagnant economic growth and high operating costs.
Additionally, the country’s economy has been sluggish, with GDP growth consistently underperforming expectations.
This, coupled with high interest rates, has made borrowing and expansion more costly for businesses, leading to reduced investment in new hires.
As a result, companies have become more cautious, opting to cut costs and streamline operations rather than increase staff, leading to a notable slowdown in hiring across the country.
This trend poses significant challenges to job creation and economic recovery in South Africa.
Stats SA also reveals that, since the start of the year, 759 companies have entered into liquidation.
South Africa’s liquidation rates have come down in the past two years as the country recovers from the Covid-19 pandemic.
However, Southern African Advisory Company’s Tiaan Herbst told Kaya Biz last year that it is crucial to interpret liquidation data with caution.
While South Africa’s drop in liquidations could indicate that the country’s economy is improving, it could also reveal that businesses are merely surviving in South Africa’s stagnant, “zombie” economy.
Read: Another major company in South Africa enters business rescue
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