SA’s workforce ‘under-skilled and expensive’, says CEO

As South Africa this weekend marked May Day amid the standoff over wage increase talks between Sibanye Gold and the labour movement, experts yesterday warned the country’s workforce was highly unskilled, yet among the most expensive compared to other developing countries, impeding productivity and economic growth.

This is against a background of the unprecedented obstruction by workers of President Cyril Ramaphosa from addressing a Congress of South African Trade Unions-organised May Day rally in the North West.

The root of unhappiness centred on Sibanye offering an increase of R800 – R200 less than demanded.

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Also angering chanting crowds was the government’s failure to honour the wage increase agreement it signed in 2018 with public sector unions.

While SA workers enjoyed more rights compared to the apartheid era, analysts blame unions for being intransigent.

Afrika Tikkun Services chief executive Onyi Nwaneri cautioned against labour continuing to enforce a national minimum wage, which was set to shrink SA’s workforce into “a smaller, more expensive and under-skilled workforce”.

Nwaneri said a sense of entitlement in the face of a 66% youth unemployment rate and sinking labour productivity numbers, was not an option for SA to weather the storm of socioeconomic turmoil.

Although it was reasonable to argue that SA employers operated in an unequal society, requiring redress from apartheid injustices, “this alone cannot justify policy directions, which may hinder economic progress”.

“It’s important that economic empowerment ensures that people acquire the skills which translate into real economic activity,” said Nwaneri.

Many traditional professions were evolving, “creating obsolescence for some jobs, while others will require workers to upgrade their skills to remain relevant”.

“Given that companies have little organic incentive to keep these jobs open, as technology evolves, it will be incumbent upon workers to keep themselves employable with skills that speak to the evolving needs of the employer,” said Nwaneri.

CEOs worried about skills shortage

A report by PricewaterhouseCoopers showed 87% of SA CEOs were worried about a skills shortage in their organisations.

“We need to look at what other emerging economies are doing correctly when it comes to keeping employment numbers up and what best practices are being followed by companies that maintain skill relevance and abundance in their workforce,” said Nwaneri.

The latest official productivity data suggested SA’s workforce was lagging in productivity, having dropped by 5.03% year-on-year in December 2021.

Reflecting on rights enjoyed by SA workers, University of Johannesburg associate economics professor Peter Baur said the post-democracy period “brought with it an infinite number of new challenges for South Africans, most noticeably around the changing nature of the institutional frameworks that make up the core of the labour markets”.

“A distinction should be noted between local market fundamentals and international economic trends.

“One key indicator is the business confidence index, which seemed to reach a peak in 2005 but has gradually decreased post the 2008 financial crisis, remaining remarkably volatile until it bottomed out during the Covid crisis just after 2020, but appears to be on the increase again, with continued signs of uncertainty.

“Labour market participation followed a similar trend. Yet, while business confidence may appear to have made a stronger recovery – mainly due to a strengthening rand as exports in commodities increase, coupled with higher commodity prices – labour market participation still has not recovered to pre-Covid levels.”

On the Sibanye stalemate, he said the producer price index was “relatively high at 11.9%, driven mostly by rising international food and energy costs”.

“This is impacting business quite severely.”

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