Unskilled workers more vulnerable in SA’s depressed labour market - PwC data

South Africa’s official unemployment rate is almost 33%, but whether you have a job or not depends largely on your skill level.

If you are a highly educated professional, the chances that you are unemployed are slim. If you are unskilled, you probably don’t have a job.

That is the picture that emerges from accountancy firm PwC’s latest monthly South Africa Economic Outlook. It is in line with conventional wisdom, but the report backs up this perception with some intriguing data.

“Skilled jobs account for a notable 25% of all employment in the South African economy. As of 2023 Q1, the country had 4.1 million skilled, 7.5 million semiskilled and 4.6 million unskilled workers,” the report says. 

“The 4.1 million skills jobs was 6.3% more compared with 2019 Q4, i.e. the last quarter before the arrival of Covid-19. While the number of semiskilled and unskilled jobs are still below their pre-pandemic levels, skilled jobs have powered back strongly.”

This would include doctors, nurses, accountants, teachers, engineers, lecturers and economists.

Even in an economy that is barely growing in the face of the power crisis, rampant crime, shoddy road and rail networks and policy paralysis, skilled labour remains in heavy demand.

“Skilled jobs are more likely to recover quickly from an economic downturn due to demand for specialised expertise to address business challenges as well as professionals’ ability to adjust to changing market demands,” the report notes.

The contrast with workers who have less education and skills is stark.

“In turn, unskilled jobs (e.g. domestic workers, waitrons, cashiers, etc) are vulnerable to being made redundant due to cost-cutting measures,” PwC says.

“Semiskilled jobs (e.g. clerks, salespersons, machine operators, etc) are vulnerable to being made redundant due to accelerated automation, changes in client demand, and skills mismatches compared to evolving demands of the market.”

Among other things, this depressing state of affairs points to sharpening disparities of income and wealth in a country that is already widely regarded as the most un­equal on the planet.

“Clearly, the divide between those who have – and lack – specialist skills is a growing problem, increasing the risk of deeper economic inequality,” the report observes.

It is also revealing that South African professionals have skills that are also in demand abroad, and many are emigrating as a result. Precise data is difficult to pin down in this regard, but there are some indicators. 

FNB, for example, estimates that emigration is the reason for 9% of South Africa’s house sales.

There is no question that there is a skills exodus, which probably also explains why skilled professionals still find it relatively easy to find employment here. In­­deed, a frequent complaint of companies and foreign investors is South Africa’s skills shortage. But the shambles that is the Department of Home Affairs makes attempts to recruit foreign skills an arduous ordeal.

The swelling ranks of the semi-skilled and unskilled in South Africa cannot be absorbed by the domestic labour market.

In a sad irony, there is a robust demand for relatively low-skilled, low-wage workers overseas, but very few have the ability or means to emigrate.

In economies such as the US and Canada, wage growth at the lower end of the ladder is accelerating because businesses are falling over themselves to hire semi- or unskilled workers. And these are economies that, unlike South Africa, have long since dispensed with petrol station attendants and where almost no middle-class home has a maid and gardener.

Returning to the skilled workforce, the PwC report notes that “managers, professionals and others lead the organisations – both private and public – that will need to contribute to resolving the country’s overall unemployment and related social challenges”. And these challenges are many.

“In a high-inflation and slow-growth environment, the pressure to optimise costs and maximise productivity is at the forefront of most business leaders’ minds.

“Today, this pressure is made more complicated by disruptive technology, the increasing complexity of geopolitics and global trade, evolving risk and regulation, and the ongoing race to find and keep the right talent with the right skills,” the report says.

“Across industries, South African organisations need a clear and meaningful mandate to attract and retain the right people in the right place and with relevant skills, despite the economic shifts and global disruptions, thus following a ‘skills-first’ approach.”DM