Job seekers feel the pinch
Drought, weak rand, falling prices make employers wary of hiring staff, survey finds
EMPLOYERS are less optimistic about hiring staff in this year’s second quarter, which is bad news for the country’s efforts to reduce unemployment, say experts.
This is because of drought, a weak rand and falling commodity prices.
The Manpower Group released its Manpower Employment Outlook Survey for this year’s second quarter, which showed conservative hiring plans by employers.
The survey showed that opportunities for job seekers are expected to be strongest in the electricity, gas and water supply sector, and weakest in the wholesale and retail trade sector.
The managing director of Manpower SA, Lyndy van den Barselaar, said the weak global position of the rand has had a negative effect on many South African businesses across sectors.
“Increased operating and import costs, paired with the increasing costs of necessities and the decreasing price of commodities, mean many businesses do not have the budget to hire new talent in the coming quarter. This trend is seen globally for the second quarter of 2016.”
Van den Barselaar said that year-overyear hiring plans weakened in all five regions, with the Western Cape reporting a considerable decline of 9 percentage points while outlooks were 6 and 4 percentage points weaker in Gauteng and KZN, respectively. In the Eastern Cape and Free State, employers reported decreases of percentage points.
Van den Barselaar said workforce gains are expected in eight of the 10 industry sectors in the next three months. The strongest labour market is expected in the electricity, gas and water supply sector. Elsewhere, employers reported cautiously optimistic hiring plans. Flat labour markets are expected in agriculture, hunting, forestry and fishing, and wholesale and retail.
“Owing to the continuing droughts, water shortages and increasing cost of electricity, South African citizens continue to look into alternate sources of electricity and ways in which to conserve water.
“This is most definitely a contributing factor to the growth in the utilities sector, as businesses within the sector continue to work on and develop new and innovative products and ideas and expand into new areas of the country.”
FNB senior industry analyst Jason Muscat said there was unlikely to be any significant employment gains over the medium term. He added that the public sector, which had historically been a big driver of job growth, was under fiscal pressure to reduce expenditure and headcount.
“In terms of the private sector, business confidence is extremely weak and companies are reluctant to invest when confidence is low. In cases where companies are investing, it is often in capital equipment to reduce the dependence on labour and increase automation. South Africa’s high unemployment rate is structural and even much faster economic growth rates are no guarantee of a single-digit unemployment rate.”
The chief economist at Stanlib, Kevin Lings, said the labour market was under pressure in the formal sector of the economy. He said specific sectors such as the mining industry were affected by factors such as commodity prices, which could result in more retrenchments in the months ahead.
Lings said the agricultural sector was struggling because of the drought and farmers could not employ more people. He added that most other sectors were cautious about hiring staff because they were watching their cost base.
He said it would be helpful if the economy added more jobs, but with factors such as the weak rand, the outlook would be more constrained.