/ 19 March 2009

SA employment growth dipping

Employment growth in South Africa is steadily declining but the country remains better off than many others, consulting company Grant Thornton said on Thursday.

”There are clear signs of a slow-down in our economy,” said Grant Thornton national chairperson Leonard Brehm.

Grant Thornton’s Employment Growth Index (EGI) for 2009 reflected employment growth of 4% in privately held businesses in South Africa — a decline of 2% from 2008, when the EGI was 6%.

The EGI, which is part of Grant Thornton’s International Business Report, measures increases and decreases in employment, as reported by the businesses surveyed.

”As expected, the retail and manufacturing sectors fared the worst … the construction and services sectors are the sectors in which job growth has taken place in South Africa in the past year,” Brehm said in a statement.

”Unfortunately employment growth in these sectors is not big enough to make a dent in our unemployment numbers.”

A sector analysis revealed that 23% of the retail sector and 22% of the manufacturing sector decreased employee numbers in the past year.

Twenty five percent of the retail sector and 13% of the manufacturing sector increased employee numbers compared with 37% for the construction sector and 40% for the services sector.

Looking ahead, the index found that 29% of businesses in the country intended to increase their staff complement in the next 12 months.

Globally, a majority of businesses expected a decrease in their staff numbers, with only 4% of businesses expecting to increase employment, Grant Thornton said.

Firms in Vietnam (60%), Botswana (49%) and Armenia (35%) were the most optimistic, expecting to increase employment in the year ahead.

He added that South Africa was unlikely to see any significant growth in employment next year either.

Turning to salary predictions for this year, 91% of businesses in South Africa had indicated that they intended to increase salaries in line with inflation or above, compared to the global average of 64%.

In South Africa, only 7% of businesses expect to reduce pay or offer no increases over the next 12 months.

Globally, employees at nearly a quarter of businesses surveyed could be worse off in the year ahead, Grant Thornton found.

The research findings revealed that 21% of businesses planned to offer no pay rise in 2009 while 3% of businesses expected to reduce pay.

The gloomiest salary predictions come from Asia Pacific, where 29% of businesses surveyed would offer no pay rise in 2009, Brehmn said.

”In markets where labour is plentiful and there has been a fall in demand for skilled workers, jobs are valuable and employees are easier to replace.

”By contrast, South Africa is subject to a severe shortage of skills and employers could lose good staff and be unable to replace them if they do not offer good incentives,” said Brehm. — Sapa