Almost half of SA’s top income earners have hybrid work arrangements

20 Sep 2022

The world of work has changed fundamentally — and while bosses like Elon Musk might insist on a return to the office, most income earners would like a choice.

Almost 50% of middle-class income earners in South Africa have returned to the workplace and 36% are hybrid workers, while for top earners it’s the converse: only 37% work from an office, while 46% have hybrid work arrangements.

That’s according to the latest BrandMapp, which reflects how the world of work has changed for white-collar workers since the outbreak of Covid-19.

This year’s BrandMapp landscape study is based on the largest sample yet: 33,661 respondents. These represent the top 30% of income earners in South Africa — 12.8 million adults living in households earning more than R10,000 per month, 25% of whom, or 10 million, collectively earn R1-trillion, while the other 5% bring in more than R1.5-trillion.

Respondents were asked almost 250 questions, relating to brand preferences, lifestyle, state of mind, finances, loyalty, travel, shopping and other consumption. Produced annually by the consumer insights consultancy WhyFive, BrandMapp offers marketers and agencies the ability to segment, profile and understand their customers within this group.

From the latest report, BrandMapp noticed a significant shift between 2021 and 2022 from employment in large companies to smaller businesses, while only seeing a slight drop in full-time employment for the middle classes, and a slight shift towards self-employment and part-time work. Fewer people had side hustles this year compared with last year.

And while there isn’t much difference between age and gender demographics, differences are notable in the nature of the job and whether it lends itself to hybrid working: artists, writers, researchers, systems engineers and lecturers were more likely to work from home while doctors, nurses, teachers, engineers and specialists were more likely to be office-based.

Asking “How are we working?” BrandMapp found a subtle shift towards self-employment and part-time work, with a minimal rise in unemployment.

Given the current economic hardships, these changes are slight enough to suggest resilience in the tax-paying middle class, said the director of storytelling at BrandMapp, Brandon de Kock.

Stats SA’s Quarterly Labour Force Survey (QLFS) for Q2, released on 25 August, showed unemployment was at 33.9%, down from 34.5% in Q1 and the record high of 35.3% in the Q4 of 2021. It revealed that while unemployment had increased by 132,000 to 7.994 million, employment rose by 648,000 to 15.562 million and the labour force went up by 780,000 to 23.556 million.

Sectors where job gains were observed include community and social services (more than 276,000), followed by trade (+169,000), finance (+128,000) and construction (+104,000). Manufacturing lost more than 73,000 and transport lost 54,000, due to disruptions caused by rolling blackouts and flooding in KwaZulu-Natal.

De Kock commented that their findings were in line with the QLFS, showing that while unemployment was rising as a percentage of the total population, “we are still adding hundreds of thousands of jobs back into the economy.

“As always, we are a country of extremes and you can’t just look at one side of the equation to understand what’s really going on.”

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De Kock said while government employment remained static (29% of mid- and top-income earners are installed in government jobs), in the private sector there was a significant shift from larger corporations to smaller businesses.

There was also a limited return to the five-day office week, with almost half of the middle class earning under R40,000 a month returning to their pre-pandemic work routine, while 36% have become hybrid workers. But for top earners, only 37% are office-based all week, while 46% have hybrid arrangements.

Office sector oversupply

On 14 September, Growthpoint Properties announced a 13.9% increase in SA real estate investment trust (REIT) funds from operations of R5.3-billion and a 5.1% increase in distributable income per share of 155.6c for its financial year to 30 June 2022, on lower vacancies and rental discounts. Growthpoint’s total dividend per share increased by 8.4% to 128.4c per share. Group property assets grew by 5.2%, to R160.8-billion.

Growthpoint, which has a portfolio of 563 properties in SA, eastern Europe, Australia and the UK, said its vacancy rate in local retail had fallen to 5.5% from 6.2%, while in industrial it fell to 5.7% from 9.4%, but the rate increased in the office sector to 20.7% from 19.9% due to remote working.

The office sector remained oversupplied, but until the SA economy enters a growth phase, “conditions will remain challenging for businesses and consequently the office sector”, Growthpoint said.

The industrial property market is strongest in terms of demand-supply balance, followed by retail, with the office market being the weakest, the statement said.

“The office market has the most significant challenges. Finance, real estate and business services sector employment numbers are showing very little growth, and this sector’s employment trends are key drivers of demand for office space.”

Growthpoint, which also owns a 62.2% stake in Growthpoint Properties Australia and a 60.8% interest in the UK’s Capital & Regional Plc, said the SA retail sector was largely back to pre-Covid levels, and although consumers remain under financial pressure, it anticipated modest growth from it.

The slump in demand is borne out by FNB’s Commercial Property Broker Survey — Market Balance Q3 2022 report. John Loos, a senior economist at FNB, commented: “Both the retail and office property markets remain perceived as very significantly oversupplied, with only the industrial property market showing a slight bias towards demand being stronger than supply.”

Data from Statista indicate the vacancy rate of office property between Q1 2021 and Q1 2022 increased across all major markets in SA. Pretoria and surrounds had the lowest vacancy rate of 12.1% in 2022. Johannesburg, though, had the highest share of vacant office space, at more than 19%. Cape Town’s vacancy rate worsened marginally, from 12.8% in 2021 to 13.1% in 2022, as did Durban, from 15.3% to 16.1%. Gqeberha, meanwhile, saw a sharp jump from 10.7% to 16.8% over the same period.

Greater expectations

The shift to hybrid arrangements is evident internationally. Gartner’s “Future of Work Trends Post Covid-19” observed that hybrid work is here to stay.

“With 75% of hybrid or remote knowledge workers agreeing their expectations for working flexibly have increased, there is no doubt that the future is hybrid. In fact, if an organisation were to go back to a fully on-site arrangement, it would risk losing up to 39% of its workforce. You must create a new, human-centric model for the hybrid environment by designing work around employee-driven flexibility, culture connectedness and human leadership.”

It said that hybrid work has become a “baseline expectation” for most employees, and companies were already deriving benefits.

“Turnover has significantly increased when employees are required to come back into the office full time, and 52% of employees say flexible work policies will affect the decision to stay at their organisation. Turnover will continue to increase because the emotional costs of leaving the organisation are lower when hybrid and because there’s more choice in employers when location is no longer a factor.”

Last month, in an article headlined “CEOs predicted that a recession would bring workers back to the office. The opposite seems to be happening”, Fortune said the workforce has changed “fundamentally” during the pandemic, as bosses and employees were now “in a tug-of-war over where work will be done”, as CEOs want a return to the office, while employees are less eager.

Against the grain

Not everyone’s convinced about remote/hybrid arrangements.

Tesla CEO Elon Musk now receives detailed weekly reports on absenteeism, reported CNBC, after saying in May that “remote work is no longer acceptable”. Musk told white-collar workers at Tesla that if they were unhappy with the change, they should “pretend to work somewhere else”.

CNBC reported on 15 September that three months into the company’s return-to-office mandate, Tesla is struggling with problems including overcrowding, shortages of office supplies and low staff morale.

About 10% of Tesla staff are absent from the office every day. In a memo, Musk had instructed employees to be in the office for a minimum — “and I mean ‘minimum’ ” — of 40 hours per week or quit.

JPMorgan CEO Jamie Dimon has also been critical of remote work, saying it creates an environment that’s less honest and more prone to procrastination. In April, JPMorgan ordered about half of its staff to return to the office full-time, with the remaining 40% allowed to work on a hybrid basis.

Airbnb’s co-founder and CEO, Brian Chesky, though, announced in April that they want employees to live and work anywhere.

Chesky believes those who don’t embrace remote work are at a disadvantage because “the most talented people aren’t in San Francisco any more … and they’re not here in New York”.

“The most talented people are everywhere now — and if I need engineers, designers, product managers or marketers, they’re getting so distributed that if you limit your talent pool to community radius, you’re probably at a disadvantage.” DM/BM

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Office sector oversupply

Greater expectations

Against the grain