South African employers report limited hiring prospects for the third quarter of 2017. Of the 750 employers who participated in the survey, 9% anticipate an increase in staffing levels, 7% expect a decrease and 83% forecast no change.
Once the data is adjusted to allow for seasonal variation, the Outlook stands at +4%. Hiring prospects decline by 3 percentage points when compared with the previous quarter and are 4 percentage points weaker year-on-year.
Lyndy van den Barselaar, MD of the ManpowerGroup SA, provides insights into why South African employers are reporting limited hiring intentions for the July to September time frame: “As both global and local economic uncertainty continues, many businesses remain cautious about increasing staffing levels.
“South Africa faced two economic downgrades in recent months, which further demonstrates market uncertainty, and which has resulted in businesses being more cautious in their spending and hiring activity. This is reflected in the fact that the majority of local employers said they anticipated no change in staffing levels for the upcoming quarter,” she adds.
Employers in all five regions anticipate an increase in staffing levels during 3Q 2017. KwaZulu-Natal employers report the strongest hiring prospects with a Net Employment Outlook of +7%. Elsewhere, Outlooks of +6% and +5% are reported in the Western Cape and Gauteng, respectively. Meanwhile, employers in both the Eastern Cape and the Free State report cautious hiring intentions with Outlooks of +1%.
“KwaZulu-Natal remains a promising region for business development, with many local and international businesses looking to the region for expansion, especially those making use of its ports. A good example is Nestlé’s launch of its newly-renovated coffee production facility in Estcourt, which has reportedly created 490 indirect and permanent jobs,” explains van den Barselaar.
Compared with the previous quarter, hiring plans weaken in four of the five regions. The Outlook for the Western Cape declines by 7 percentage points, while employers in the Free State report a decrease of 6 percentage points. Outlooks are 5 and 2 percentage points weaker in the Eastern Cape and KwaZulu-Natal, respectively, but employers in Gauteng report relatively stable hiring prospects.
Year-on-year, Outlooks also decline in four of the five regions. The most notable decrease of 7 percentage points is reported in the Eastern Cape, while Outlooks are 5 and 4 percentage points weaker in the Western Cape and the Free State, respectively. Meanwhile, employers in KwaZulu-Natal report no change.
Employers in eight of the 10 industry sectors expect to increase staffing levels during the coming quarter. The strongest labour markets are anticipated in the Electricity, Gas & Water Supply sector and the Finance, Insurance, Real Estate & Business Services sector, with employers in both sectors reporting Net Employment Outlooks of +10%.
A moderate hiring pace is forecast for the Wholesale & Retail Trade sector, with an Outlook of +7%, while the Outlook for the Construction sector is +5%. However, employers in two sectors report uncertain hiring intentions, with Outlooks of -1% reported in both the Agriculture, Hunting, Forestry & Fishing sector and the Mining & Quarrying sector.
“As water shortages continue to plague parts of the country, individuals and businesses are investing in systems and technologies that enable them to save water, and lessen their environmental impact. This means that those individuals and organisations who are creating, installing, and maintaining these kinds of systems and technologies are more than likely experiencing an increase in demand, and are therefore looking to hire,” explains van den Barselaar.
Compared with the previous quarter, hiring plans weaken in six of the 10 industry sectors. Considerable declines of 11 and 10 percentage points are reported in the Transport, Storage & Communication sector and the Agriculture, Hunting,Forestry & Fishing sector, respectively. Elsewhere, Outlooks are 4 percentage points weaker in both the Restaurants & Hotels sector and the Wholesale & Retail Trade sector.
Meanwhile, hiring prospects improve in three sectors, most notably by 5 percentage points in the Manufacturing sector.
Employers in seven of the 10 industry sectors report weaker hiring intentions when compared with this time one year ago. The most noteworthy decline of 13 percentage points is reported in the Public & Social sector, while Outlooks are 6 percentage points weaker in three sectors – the Agriculture, Hunting, Forestry & Fishing sector, the Transport, Storage & Communication sector and the Wholesale & Retail Trade sector.
However, Outlooks strengthen in two sectors, with Construction sector employers reporting an increase of 10 percentage points and an improvement of 7 percentage points reported by Mining & Quarrying sector employers.
Participating employers are categorised into one of four organisation sizes: Micro businesses have less than 10 employees; Small businesses have 10-49 employees; Medium businesses have 50-249 employees; and Large businesses have 250 or more employees.
Staffing levels are expected to increase in three of the four organisation size categories during 3Q 2017. Large employers report upbeat hiring prospects with a Net Employment Outlook of +20%, while Outlooks stand at +6% and +2% for Micro- and Medium-size employers, respectively. Meanwhile, Small employers anticipate a flat labour market, reporting an Outlook of 0%.
Quarter-on-quarter, Outlooks decline by 6 and 3 percentage points for Medium- and Small-size employers, respectively. However, Large employers report an improvement of 2 percentage points, while the Outlook for Micro employers is unchanged.
When compared with this time one year ago, Small- and Medium-size employers both report declines of 7 percentage points, but the Outlook for Large employers is 4 percentage points stronger. Meanwhile, Micro employers report relatively stable hiring plans.
Globally, the strongest hiring plans are reported by employers in Japan, Taiwan, Hungary, the US, Hong Kong and Turkey. Meanwhile, employers report the weakest hiring prospects in Italy, the Czech Republic and Finland.
Dineo Kekana, investment analyst at Novare Investments, points out that the World Bank expects global GDP growth to advance to 2,7% in 2017 and a further 2,9% in 2018, compared to the 2,4% reported in 2016.
The growth of developed markets was revised up by 0,1% to 1,7% in 2016 and this is expected to strengthen by a further 1,9% in 2017.
Meanwhile, growth in emerging markets and developing economies are expected to increase from an upwardly revised 3,5% in 2016 to 4,1% in 2017.
The pickup in growth expectations was largely based on the expected improvement in manufacturing and trade, rising market confidence and stabilising commodity prices.
According to the World Bank, protectionism, high policy uncertainty and the possibility of financial markets disruption are some of the cited key risks to the global growth outlook.
“The ManpowerGroup Employment Outlook Survey (MEOS) for Q3 of 2017 corresponds with the expectations of a strengthening global economic backdrop, with the majority of the respondents content to retain current staff and grow payrolls marginally,” Kekana comments.
“According to the MEOS, the strongest third quarter hiring plans are being reported in Japan, Taiwan, Hungary and the United States. In contrast, the weakest outlooks are reported in Italy, the Czech Republic and Finland.”