Nearly half of South African private businesses say a lack of skills is the biggest constraint to business growth in this country, a new survey showed on Wednesday.
This the second straight year that workforce issues have been cited as the greatest impediment to growth in the Grant Thornton annual International Business Report (IBR).
The survey showed that of the 48% businesses saying they faced a skills crunch, 72% of them were found in the construction sector.
The view in this sector comes at a critical time in the country, against the backdrop of building support structures for the 2010 Soccer World Cup, Eskom’s massive package to build new power stations and Transnet’s budget to expand railways lines, ports and fuel pipelines.
Apart from the construction sector, more than half (52%) of businesses in the services sector cited lack of skills as the major constraint to growth.
Lee-Anne Bac, director at Grant Thornton Strategic Solutions, said although the skills shortage was a global concern, South African businesses were the hardest hit.
“The fact that South Africa is 10 percentage points higher than the global average does indicate that the skills crisis is more acute here. A lack of skills development, emigration and crime are just some of the factors that contribute to this problem,” she said.
When asked about the areas of regulation that had the biggest impact on the ability to grow, labour laws were ranked number one at 28%.
Globally, 37% of privately held businesses in 34 countries rank a shortage of skills as their greatest constraint to business growth.
“This is the first time in the history of the IBR survey that workforce issues top the chart as a global concern for growth,” Bac said.
Other factors that hampered business growth were cost of finance, reduced demand, shortage of working capital and shortage of long-term finance.
Bac is concerned that the increased impact these factors have on businesses’ ability to grow, signifies an economic slowdown for the country.
“Interest rates coupled with the introduction of the National Credit Act in June 2007 are making it increasingly difficult for business to remain profitable. Economic slowdown is inevitable,” she said. — I-Net Bridge