{"id":660643,"date":"2023-01-30T16:43:07","date_gmt":"2023-01-30T14:43:07","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=660643"},"modified":"2023-01-30T16:43:07","modified_gmt":"2023-01-30T14:43:07","slug":"south-africa-is-about-to-hit-a-worrying-turning-point","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/660643\/south-africa-is-about-to-hit-a-worrying-turning-point\/","title":{"rendered":"South Africa is about to hit a worrying turning point"},"content":{"rendered":"

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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.<\/p>\n

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<\/strong> as a result: despite adding 200,000 jobs, the economy isn’t growing fast enough to match the growing population and workforce.<\/p>\n

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<\/strong>.<\/p>\n

“There is certainly upside potential to the jobs growth outlook for 2023. However, the country\u2019s 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.”.<\/p>\n

The graph below illustrates the three possible employment scenarios for South Africa:<\/p>\n

\"\"<\/a><\/p>\n

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.<\/p>\n

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.<\/p>\n

“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.<\/p>\n

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.<\/p>\n

However, despite this progress, PwC said it is likely short-lived.<\/p>\n

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%.<\/strong><\/p>\n

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.<\/p>\n

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.<\/p>\n

A further update on the compact is expected in the next State of the Nation Address this year.<\/p>\n

The graph below shows PWC’s growth predictions, which due to them being low, hampering employment:<\/p>\n

\"\"<\/a>Skills<\/strong><\/p>\n

The latest Employment Industry Report<\/a><\/strong> from the jobs portal CareerJunction showed that over the last two months in 2022, there was a 6% decline in hiring activity.<\/p>\n

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:<\/p>\n