19 December 2012

South Africa: Employment Prospects for First Quarter of 2013 One of the Weakest

The South African labour market is expected to remain downbeat, with employers reporting one of their weakest first quarter forecasts on record. According to the 2013 Q1 Manpower Employment Outlook Survey, job seekers in the transport, storage and communication sector should find the most opportunities in the quarter ahead.

The survey indicates that South African employers are being cautious with hiring plans for the first quarter of 2013. With 9% of employers expecting to increase staffing levels, 8% anticipating a decrease and 82% forecasting no change, the resulting seasonally adjusted net employment outlook stands at -1%. Hiring prospects remain relatively stable quarter-over-quarter and are unchanged year-over-year.

"The recent strikes have led to lowered business and investor confidence in South Africa and hampered the already struggling economy. The strikes are also expected to have a drag effect on any sustained recovery in 2013. Lowered investor sentiment brought on by the strikes is also affecting businesses plans for future employment and this will translate into less capital in the system and less business growth, ultimately leading to fewer employment opportunities. Mass lay-offs have increased unemployment figures and may possibly lead to long-term goals of mines to find automated solutions. Other mines have acclimatised to finding workarounds for striking or laid-off workers and are adapting to smaller workforces," says Lyndy van den Barselaar, MD of Manpower Group South Africa.

Waiting for Mangaung results

"With the slowdown of China's growth, our biggest commodity importer, we can expect lower demand for steel and other commodities. Employers are also factoring in rises in energy and fuel prices into their employment plans in light of higher oil prices and Eskom's plans to increase electricity charges by 16% per annum over the next five years. Many employers are also adopting a wait and see approach in relation to the results of Mangaung in preparation for elections in 2014.

Anticipated changes in BEE labour laws also have employers exercising caution as to their future hiring plans. However, one industry that seems to be growing in the Western Cape is offshore which will likely result in more employment in the region," explains Van den Barselaar.

Payroll gains are forecast in four of the ten industry sectors. Employers in the transport, storage and communication sector report the most optimistic hiring plans with a net employment outlook of +5%. Some job gains are also anticipated in the public and social sector and the agriculture, hunting, forestry and fishing sector, with outlooks of +4% and +3%, respectively. Meanwhile, employers in five sectors anticipate negative headcount growth, most notably in the construction sector where the outlook stands at -10%. Electricity, gas and water supply sector employers report an outlook of -4% and the manufacturing sector outlook is -3%.

Growth in IT and telecoms sectors

"The consumer is driving employment in many of these industries and companies seem be playing a waiting game, assessing the currently low consumer sentiment and spending, before embarking on any decisive employment strategies," Van den Barselaar says.

"Increasing agricultural commodity prices brought on by shortages due to factors such as the drought in the US have seen expectations for employment in some agricultural sectors improve as farmers aim to capitalise on rising prices. Strong growth in the telecoms industry as well as IT have employers predicting employment growth in these sectors. However, the on-going uncertainty in global markets are still hampering the financial industry which, along with consumer cost cutting, is also affecting industries such as insurance and real estate."

Regional forecasts

Employers anticipate payroll gains in two of the five regions during the first quarter of 2013. Slow-paced hiring activity is expected in both KwaZulu-Natal and Western Cape, with net employment outlooks of +2%. Elsewhere, job seekers in Eastern Cape are likely to face a muted hiring pace, with employers reporting an outlook of -3%. Employers in Gauteng and Free State report uncertain hiring plans with outlooks of 0% and -1%, respectively.

Quarter-over-quarter, hiring prospects weaken in three of the five regions. The outlook for Free State declines by 7 percentage points, while decreases of 3 percentage points are reported in both Eastern Cape and Gauteng. Elsewhere, the KwaZulu-Natal outlook improves by 5 percentage points and hiring intentions are unchanged in Western Cape.

When compared with the first quarter of 2012, hiring prospects strengthen in KwaZulu-Natal and Free State, with outlooks improving by 5 and 3 percentage points, respectively. However, in Eastern Cape, employers report a 5 percentage point outlook decline.

"The first quarter of 2013 isn't predicating any large scale upswings for employment, however, some positive factors may indicate that employment will start picking up through the year. With favourable outcomes from Mangaung and the holiday season, we may see a more positive outlook for the second quarter of the year," concludes Van den Barselaar.

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