The economic slowdown has already had an impact of employment levels, which declined in 2008 and are expected to drop further this year. Paradoxically, skilled staff are still in demand and can command premium salaries.
These are some of the results from Adcord Holdings' Staffing Industry Employment Index, compiled over a four-year period on five industrial sectors: mining; manufacturing; construction; trade; and financial, real estate and business services.
"This is the first time that South Africa is presented with a comprehensive, research-based report on the country's employment and recruitment environment showing trends in permanent and flexible staffing," says Hilton Brown, head of group business development at Adcorp.
The index shows a decline of 18,3% year-on-year, with an expectation of a further decline in overall employment levels in the short to medium term due to economic slowdown.
The index reveals that the macroeconomic situation in South Africa is on a steep downward trend in general and that demand for labour is down, while demand in specific specialised labour is still evident.
The supply of skills needed in the economy, especially during the next growth phase, is still a cause for major concern.
On remuneration the index shows on average that employees' annual increases are less than increases in CPIX, with an exception of employees in the highly skilled bracket.
In general, the indices show that the widely reported 'doom and gloom' is not necessarily the case in the staffing industry. The diversity of the economy allows the staffing industry to focus on those sectors or industries where there is growth or where the same levels of labour demand is sustained.
Going deeper into each sector and industries, the index shows that, while most industries are trending down, there are those that are stagnating (in a holding pattern) and others that are picking up.
Interestingly, it correlates with international studies showing that more than 60% of companies across the globe are in a holding pattern, retaining existing levels of staff that are permanently employed and atypically employed – 13% indicated that they will be employing staff this year and 16% indicated retrenchments.
With regard to demand and supply of workers to the economy, the demand for skills is markedly down, hence the convergence between the demand and supply of required skills in the country.
The Remuneration Index has declined year-on-year by 3,7% underscoring the fact that, in general, consumer inflation is the main driver of remuneration. For the bulk of South African workers, the increases in their annual cost of living is higher than their salary increases resulting in an ever-increasing number of working poor South Africans – a trend which is parallel to international trends.
An interesting observation is the fact that corporate South Africa is either focusing on the retention or acquiring of highly skilled professionals in senior management, and because of the critical skills shortages companies are willing to pay a premium to acquire and retain these skills.
The worst affected sectors are mining, manufacturing and financial, real estate and business services. In mitigation, the large-scale infrastructural development projects associated with the 2010 FIFA Soccer World Cup, Expanded Public Works Programme and other major energy and transport related industries are contributing to employment creation.