Get the best out of employees in a crisis

The level and extent of underemployment is a topic that is generally underexplored in SA, including the response to the Covid-19 pandemic. Underemployment speaks to the extent to which labour participants are optimally used based on their skills, qualification and experience.

In their working paper “Underemployment in SA”, Rochelle Beukes and others looked at underemployment through two approaches: timebased underemployment, and the inadequate employment situation approach.

The former applies to what is already happening when businesses reduce the working hours of their employees (to fewer than 35 hours), when those employees have the capacity and willingness to work more. The latter is usually characterised by the labour participant having years of education or experience that are one standard deviation from the mean of the labour participants in that labour category.

The researchers found black labour participants had a higher prevalence of underemployment, especially women.

As of the fourth quarter of 2019, SA reported 768,000 labour participants who were underemployed, up from 676,000 in 2008, according to the Stats SA quarterly labour force survey. The industries in which there has been the largest increase are community and social services, where the number grew from 86,000 in 2008 to 181,000 by the fourth quarter of 2019.

Private households have the highest proportional value of underemployed labour at 217,000, trade at 122,000 and construction at 93,000.

In community and social services, where the public labour component has been seen as bloated and having enjoyed above-inflation wage increases, underemployment has grown the fastest. These statistics should energise the government to accelerate the work it is already doing to ensure all those employed in the public service are fit for purpose and used optimally.

From an occupation point of view, 462,000 underemployed workers are in elementary and domestic worker roles, with 190,000 in sales, services and craft-related trade. This suggests that the workers in underemployment are also in the sectors that are at most risk of shedding jobs given the effect of the pandemic on economic activity at household and corporate level.

According to the International Labour Organisation, SA workers rank seventh globally in terms of average hours worked a week, at an average of 43 hours.

In the Stats SA Business Impact Survey covering the Covid-19 pandemic in SA, it was found that since the lockdown, 28.3% of companies started implementing measures to reduce the working hours of employees and 19.6% had laid off staff in the short term.

A reader letter in The Economist magazine headlined “When pubs were closed” reflected on 1974, when the UK government introduced a threeday work week. The forecast was for a 40% decline in productivity, aligned with the 40% reduction in working hours, but the decline was only about 10%. Corporates clearly learnt quickly how to sweat their human assets in the crisis, while trying to preserve as many jobs as possible.

Studying underemployment enables us to have a view of the capacity of the labour force and the extent to which that capacity is not being used. Instead of laying off workers, corporates can look at how best to optimise their labour force to help stay resilient in a troubled time and retain critical skills in their businesses for when conditions improve.