Jobs on the line
JOB LOSSES AND unemployment are the saddest consequence of the global economic downturn. Though more severe overseas, South Africa is also seeing its share of retrenchments. That should be bad news for the companies listed in the business training and employment agencies sector of the JSE. It is – but not on the scale seen in major developed countries.
Two main reasons are that, while job losses and recruitment freezes are a reality at many companies, there’s strong demand in SA for a number of specialised skills, such as engineering. And there’s an ongoing need for a skilled workforce that can’t easily be met. Even, surprisingly, for contract workers, usually first in line for retrenchment.
“I do believe we’re quite misunderstood. People think employment agencies are tied to economic growth and contractions – but there are mitigating factors in SA,” says Adcorp CEO Richard Pike.
He notes while contract workers often are the first retrenched and that it may sound contradictory, there’s strong demand for such workers in the current market. “Many clients are looking for contract workers because it gives them flexibility at times such as these.”
Grenville Wilson, CEO of Kelly Group, noted in a recent update to stakeholders that SA business units in the first quarter did well and came in slightly ahead of budget, while the group’s operations in the US were a little behind expectations. He puts that down to a much greater impact from the negative sentiment and recessionary climate in the US.
Pike says other issues offer employment agencies some protection from the general economic downturn. “We have selective industry exposure. For example, all of us have very little exposure to mining.” He adds employment agencies have benefited from Government’s push to upgrade skills development and training.
But Government could also be waving a red flag. Wilson says the provision for “decent work” in the ANC’s election manifesto will probably lead to regulation of the