Recruitment is a tough gig these days

The economy has been slowing for several years, and this accounts in part for the phlegmatic pace of recruitment.

But government’s meddling in labour affairs is probably the greatest killer of jobs, according to Free Market Foundation economist, Loane Sharp.

Government is the only employer doing any serious hiring.

The public sector now employs more than 2.1m people, roughly a third more than a decade ago, while the private sector has shed 4% of its jobs over the same period.

Earlier this year Telkom announced it was to lay off 4 400 workers and transfer 3 400 more to outsource companies.

Trade union Solidarity warned that white employees were especially at risk, as employment equity is one of the criteria to be used in deciding who gets booted.

Lonmin plans to cut 6 000 jobs while Anglo American has plans to retrench 53 000 workers over the next six years.

A further 900 jobs are on the chopping block at Glencore’s Eland Platinum mine near Brits west of Pretoria. 

But worse is to come. Government’s propensity for sabotaging private sector job creation was put to the test over the last year and it passed with flying colours.

Recent amendments to the Labour Relations Act, effective from the beginning of the year, have forced companies to convert temporary staff to permanent employees after three months.

The African Professional Staffing Organisation (Apso) says 2.45m jobs are in jeopardy as a result of these amendments.

Apso is currently challenging this interpretation of the law in court.

“At a time when the country desperately needs jobs, we get a piece of legislation that effectively kills temporary jobs,” says Roly Boardman, chairman of the Apso ethics committee.

“Every advanced economy in the world relies on temp workers. This law is not going to change that.

“You have companies that normally employ say 60 temp workers to meet seasonal demand now saying they will take on 10 permanent employees and dispense with the rest. Straight away you have lost 50 jobs.”

Sharp says 5m people entered the labour market over the past decade, but only 3m found work.

“This is the most worrying aspect of our economy, that the only sector which is actually growing from a jobs perspective is the public sector.”

The official unemployment rate is 26%, but Sharp expects this to rise to 40% within seven years as more people leave school only to have their dreams crushed on entering the job market.

“The private sector has stopped hiring, in fact it is laying off workers,” he says.

The unemployment rate could be as high as 50% in seven years if a narrower definition of employment is used.

StatsSA regards someone who works for an hour a week as employed.

There’s no shortage of people actively looking for work – 5.8m of them, according to StatsSA – but few of them are going to find jobs, as private sector recruitment has gone into reverse, and the public sector puts the breaks on new placements.

“There are more companies laying off than hiring,” says Gareth Tindall, sales and marketing executive at Adcorp, the country’s largest recruitment firm.

Adcorp placed 174?000 people in jobs in the last financial year and screened 1.5m candidates. This affords it a bird’s-eye view of recruitment trends.

“Companies are looking for people with the right skills, but it is difficult to find the right candidates. What this tells us is there is a massive lack of skills in the country,” says Tindall.

Sharp agrees, adding that unemployment is virtually zero in the highly skilled categories.

“The problem of unemployment is limited to those without the necessary skills.”

Tindall says temporary recruitment was recovering from the post-2008 drop, but the change in the Labour Relations Act has thrown the market into confusion.

This is an excerpt from an article that originally appeared in the 1 October 2015 edition of finweek. Buy and download the magazine here

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