South Africa Economic Outlook

Building skills to increase employability and staff retention

PwC South Africa is pleased to share its ninth South Africa Economic Outlook report for 2022.

In this edition of the South Africa Economic Outlook, we focus on building the skills of South Africa's labour force to increase employability.

There are currently 833,000 fewer unskilled and semi-skilled jobs in South Africa compared to the pre-pandemic (2019 Q4) period. These workers were more likely to lose their jobs during lockdown and less likely to subsequently regain them compared to skilled workers. Put differently, higher-skilled adults were more likely to have and retain a job during COVID-19.

South Africa cannot count on future economic growth to solve the country’s unskilled and semi-skilled unemployment problem. While our estimates show that employment could grow by 200,000 per year towards 2030, we expect the labour force to grow by almost 350,000 adults per year over the same period. As a result, the country’s unemployment rate will continue to climb — and could reach 40% by 2030 under our downside economic scenario.

Lullu Krugel, PwC South Africa Chief Economist, says:

“The exclusion of millions of unemployed adults from partaking in the country’s economic life is contributing to a decline in South Africa’s social cohesion. This, in turn, is causing an increase in societal breakdown and stability risks associated with protests and unrest. As seen in many countries globally at present, when the general population is not prospering, societies are in deep trouble. Real and felt prosperity are absolute requisites for countries or regions to function effectively.”

The country’s education system is currently not producing in-demand workers with the right skills for the job. Eight out of ten unemployed adults have some secondary schooling or completed matric, while there are also 742,000 unemployed people with tertiary education. To improve employability, South Africa needs a national skills vision that includes roles, responsibilities and expectations for every social stakeholder. This includes the private sector who needs to focus on the upskilling of their employees to remain competitive.

President Cyril Ramaphosa announced in his 2022 State of the Nation Address (SONA) that stakeholders were working on a comprehensive social compact to grow our economy and create jobs. PwC welcomed the endeavour and commented at the time that this compact needs to encompass a national skills vision that includes roles, responsibilities and expectations for every stakeholder. The president noted on 31 August 2022 that the ‘Framework for a Social Compact in South Africa’ will seek to “provide skills and opportunities to the millions of South Africans that have been relegated to the margins of the economy.”

Christie Viljoen, PwC South Africa Senior Economist, says:

“Private sector organisations should undertake robust workforce planning to understand the impact technology and automation has on jobs in their industry, and what this means for the skills needed by their workers in the future. Upskilling will be vital to ensuring that local industries are staffed with people who have the know-how to help drive economic growth and development. Our international research shows that, at a company level, offering training and development opportunities has a quantifiable positive impact on company financials. Specifically, these opportunities result in fewer resignations and increased profitability.”

Key content in this edition includes:
• Labour market recovery: Despite jobs growth in 2022Q2, employment is still 5% below pre-pandemic levels.
• High school is not enough: Eight out of ten unemployed adults have some secondary schooling or completed matric.
• Employment outlook: SA’s long-term economic growth potential is not enough to reduce the unemployment rate.
• PwC surveys: What students are saying — and universities are doing — about readiness for the working world.

In our new monthly ESG (Environmental, Social and Governance) focus, we look at practical ideas about upskilling and human capital development in the private sector workplace.

Lastly, the featured PwC research section reports on skills-related analysis published in our recently released 2022 Executive directors: Practices and remuneration trends report.

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