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Adcorp releases results of the first comprehensive report of South Africa’s employment trends

Last modified on 1/27/2015 11:50 AM

Adcorp Holdings today released the results of the Staffing Industry Employment Index – the first South African focused composite employment index that has been compiled over a four-year period on five industrial sectors.

“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,” said Hilton Brown, Head of Group Business Development at Adcorp Holdings.

Focusing on five of the nine major industrial sectors, 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 focuses on mining, manufacturing, construction, trade and financial, real estate and business services (‘FREBS’).
Announcing the results of the index, Adcorp’s Head of Strategic Research, Werner Smith, said: “We believe that this index will serve to demystify the staffing industry and provide different stakeholders with pointers as to what the expectations from the industry are.”

The Staffing Industry Employment Index consists of four underlying indices namely a macroeconomic index, which measures the impact that the international and local macroeconomic situation have on employment and the staffing industry in South Africa; a demand index to measure the current, medium and long-term appetite of Corporate South Africa as a consumer of skills; a supply index to determine the gap between supply and demand of labour for informed decision making and strategy development and a remuneration index to determine the correlations between demand, supply and the remuneration of skills in South Africa.

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 – i.e. retaining existing levels of staff that are permanently employed and atypically employed. Thirteen percent (13%) indicated that they will be employing staff this year and sixteen percent (16%) indicated retrenchments (Refer to our international report). 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 (‘FREBS’). 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.

Commenting on the Staffing Industry Employment Index, Werner Smith said: “The South African Staffing Industry is an industry that is often misunderstood, misrepresented and without a true sense of its real positive contribution to national strategic priorities, such as skills development and job creation.”

“Our hope is that the index will help the public and private sector organisations to benchmark their organisations’ resourcing strategies on a monthly, quarterly and longer-term basis against a national metric such as an economic indicator of South African employment trends overall,” said Hilton Brown.

The Staffing Industry Employment Index is made up of a macroeconomic index, a demand index, a supply index and a remuneration index.

Key sectors in the permanent recruitment and flexible staffing blue collar market study will cover mining, manufacturing, construction, trade and financial, real estate and business services sectors.

The research is conducted by Adcorp Holdings and analysed by independent contributors namely Mike Schüssler, a leading economist, Arthur Thompson, an investment analyst, Loane Sharp, a workforce optimisation analyst and strategist, John Botha, a labour law specialist and Chris Blair, an expert on employee remuneration.

The results are independently verified by the University of Johannesburg.

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