Chapter 5

THE SOUTH AFRICAN LABOUR MARKET AND JOB OPPORTUNITIES

The South African labour market faces several problems. This chapter focuses on two of the seven key problems identified by the Department of Labour: 99

high rates of unemployment and underemployment; and

low rates at which productive employment is being created in the economy.

Former SANDF personnel and non-statutory force combatants have to be reinserted into the South African economy. While this rather technocratic brief seems easy enough, the possibilities to integrate soldiers into a civilian and mostly peacetime economy are limited by various real and potential socio-political and economic constraints. The South African economy is growing slower than projected. While inflation is under control, sudden changes in the labour market, and the inflow or outflow of investments can tip the scale in a less amicable way. The sustained low monetary value of the rand and several other issues have to be taken into consideration when assessing the state of the South African economy.

Unemployment

Even a rough estimate of unemployed, demobilised SANDF personnel is currently impossible. To date, no official figures exist. Only if the assumption is made that the average former soldier is likely to be unskilled or semiskilled, black, male and between 30 and 60 years old, could it be estimated that approximately three to four out of out of every ten former soldiers would be unemployed.

The national official unemployment rate was put at 22.5 % in February 2000.100 However, this figure has been released as part of a discussion paper, rather than as an official statistic. The figure has been adjusted to accommodate the discrepancies between findings from various surveys that were recently conducted. For example, according to the findings of the Labour Force Survey conducted in February 2000, more than a quarter of the potential economically active population are unemployed. Based on these findings, it was estimated that there were 26.5 million people of working age (between 15 and 65 years old). Among them, 16.2 million were economically active, of which 11.5 million were employed and 4.3 million unemployed (this explains the unemployment rate estimate of 26.5%). Of the 10.2 million who were not economically active, 4.8 million were scholars and 1 million were full-time homemakers.

The October Household Survey indicated a 23.3% unemployment rate.101 The Survey of Employment and Earnings in Selected Industries (SEE) recently showed a downward trend in formal sector employment while, according to the Labour Force Survey, employment in other formal business sectors, which were not covered by the Survey of Employment and Earnings, showed an upward trend. More specifically, the Financial Mail reported that the June 2001 release of employment figures by the South African Reserve Bank has shown that employment in the non-agricultural, formal, private sector increased in the last quarter of 2000.102 It added, however, that the average level of employment still fell by 2.9% in 2000, following declines of 2% in 1999 and 3.7% in 1998. Making use of the Labour Force Survey, rather than the October Household Survey, the report stated that unemployment among the economically active population in South Africa was 26.9%. If ‘discouraged workers’ — those who have given up looking for a job — are included, the unemployment rate climbs to 37.3%.103

The National Employment Strategy Framework states that, because not enough jobs are being created and because this is the perception and experience of many ordinary people, there is indeed cause to reflect and to act.104 It is estimated that — against a background of unemployment varying between 20% (using the ‘narrow’ definition of unemployment) and 29% (according to the ‘broad’ definition) — the economy must generate about 250 000 new jobs in net terms to ensure that the unemployment rate does not rise. However, in order to absorb new entrants into the labour market, the economy should generate more than 350 000 net new jobs per annum.

In addition, the Framework identified the following discernible trends, which will impact on the economy and labour market:

Demand for skills and a better-educated workforce will increase rather than diminish across the total range of sectors and occupations.



Structural changes in the labour market will not be reversed and will probably accelerate.



Skills development will be increasingly a life-long commitment since the pace of change will accelerate.105

The key objectives of the National Employment Strategy Framework were to boost employment growth in the short to medium term and reduce poverty in the longer term. It focused on increasing the demand for labour and on the supply side of labour (the employability of labour).

According to the National Skills Development Strategy, formulated for April 2001 — March 2005, unemployment rates are as high as between 27% and 37%.106 Furthermore, it stated that South Africa has approximately 3 million skilled and highly skilled people as opposed to 7 million people in semiskilled or unskilled work or unemployed. To illustrate the lack of commitment to training in the South African labour market, the National Development Skills Strategy refers to the International Labour Organisation (ILO) Country Profile of South Africa.107 The report stated that, although 87% of a sample of manufacturing companies claimed to provide skills development opportunities for their employees, in practice, 70% only offered induction and initial training. In the same ILO report, it was suggested that, in the firms surveyed, production workers accounted for no more than 10% of those who had received training during the previous year.

The following sections deal with the supply and demand side of labour in South Africa. The aim is to provide an overview of current employment trends in South Africa.

Employment

Daniels and Lundall of the Development Policy Research Unit at the University of Cape Town conducted an analysis of the current job market in South Africa.108 The analysis entailed a review of the following three components of employment:

the number of skilled, semiskilled and unskilled workers per province and location (urban and rural areas);



the sectoral dimension of occupational categories (skilled, semiskilled and unskilled workers); and



changes in the number(s) of workers in each sector and per occupation that took place between 1995 and 1999.

It is important to note that ‘occupations’ refers to skilled, semiskilled and unskilled workers. The primary data source on employment in South Africa was the October Household Survey. The definitions of the three categories are presented in table 9.

The following analysis is based on the October Household Surveys conducted in 1995 and 1999. A two-stage sampling procedure was applied during these surveys. A sample of 30 000 households was drawn from 3 000 enumerator areas (ten households per enumerator area). Both the 1995 and 1999 sample were based on the 1996 Population Census enumerator areas and the estimated number of households from the 1996 Population Census. The sample was stratified, clustered and selected to meet the requirements of probability sampling. The sample was explicitly stratified by province and area type (urban/rural). Within each explicit stratum, enumerator areas were stratified by arranging them in geographic order by district council, magisterial district and, within the magisterial district, by average household income (for formal urban areas and hostels) or enumerator area. The allocated number of enumerator areas was systematically selected with probability proportional to size in each stratum. The sample excluded all detainees, hospital patients, residents of boarding houses and hotels (whether temporary or semipermanent). This sampling procedure complies with international best practice as far as survey design and methodology are concerned.

Throughout the analysis below, employment is disaggregated by occupational classification into skilled, semiskilled and unskilled occupations. This occupational classification system thus forms the basis for the analysis in the exploratory study.

Trends in the job market between 1995-1999

This section evaluates changes in the job market between 1995 and 1999, with a view to identify:

the present status of the labour market; and

the possible short-term trajectory of employment growth (decline).

The discussion that follows is based on occupational and sectoral shifts for skilled, semiskilled and unskilled employees.

Occupational and sectoral changes

Overall, positive absolute employment growth has been reported for the domestic economy. It is important, however, to determine the distribution of these employment gains at the sectoral and occupational level. In this manner, the ‘winners’ and ‘losers’ from these overall employment changes can be determined.

Table 10 shows that the largest aggregate employment growth between 1995 and 1999 was reported for internal trade (454 410), finance (352 112), construction (134 663) and transport (69 257). Within the four sectors, positive growth was registered for all three occupational categories that formed part of the analysis.109 Although mining and manufacturing exhibited positive overall growth rates in employment, it was spread unevenly. This resulted in job losses in the semiskilled occupational category in the mining sector (12 197) and the unskilled occupational sector within manufacturing (95 692). During 2000, the shedding of jobs in the gold-mining industry was particularly brutal at 6.7%.110

Sectors that experienced overall negative employment growth included agriculture, utilities, community services and domestic services. Except for utilities, in which employment over the five-year period shrunk at every level, the declines in employment were concentrated mainly at the semiskilled and unskilled occupational levels. In agriculture, the employment reductions affected unskilled occupational levels. In community services, the semiskilled and unskilled occupational levels were affected, while the employment reductions in domestic services were concentrated in the unskilled occupational levels and marginally at the skilled levels. Consequently, an examination of shifts in the formal sector aggregate national employment showed that 266 288 new jobs were created throughout the South African economy between 1995 and 1999. The real ‘winners’ have been occupational categories located within skilled and semiskilled levels. Overall, 567 504 unskilled jobs disappeared and these were the real ‘losers’ of the structural shifts in employment changes.

The current job market in South Africa

Table 11 illustrates the occupational distribution of employment in the South African labour market, classified according to skilled, semiskilled and unskilled occupations. The shift to skilled and semiskilled occupations as a proportion of the economically active population is likely to continue especially when taking into account the proactive attempt towards trade liberalisation and constructive engagement with the global economic system. Employment growth is likely to occur within the skilled and semiskilled occupations. While these occupations may grow at different rates in the short to medium term, (and perhaps the rate of growth in semiskilled occupations will surpass that of skilled occupations in the short to medium term), a scenario for the long term is that skilled occupations will exhibit longer and more continuous growth.

The provincial organisation of the occupational distribution of employment (see table 12) illustrates the manner in which the aggregate national trends displayed in table 11 resonate throughout the nine provinces in the country.

Closer examination of table 12 reveals that Gauteng seems to set the pace and perhaps even the trends in terms of the occupational distribution of employment within the South African labour market. While it may be conceded that Gauteng embodies the fulcrum of economic activity in South Africa, it has the lowest proportion of unskilled occupations within its economic and geographic boundaries and the highest proportion and concentration of skilled and semiskilled occupations among the country’s nine provinces. Apart from Gauteng, with an economically active population of approximately 2.6 million people (the largest provincial labour force), three other provinces have a job market that exceeds one million individuals: the Western Cape (1.5 million), Eastern Cape (1 million) and KwaZulu-Natal (1.9 million). The occupational distribution according to levels of skill remains less favourable than that found in Gauteng, but the Western Cape is in the second position with respect to skilled and unskilled occupations. Both the North-West and Mpumalanga have a proportionately larger semiskilled employment category than the Western Cape, but are surpassed by it in terms of the skilled employment categories. Provinces that exhibit the highest concentrations in the unskilled categories and the lowest concentrations in the skilled categories are more likely to exhibit low employment generation in the short term. Evidence by Bhorat and Hodge shows that, on aggregate, low-skilled occupations have been shedding labour at a faster pace than skilled and semiskilled occupations are able to absorb.111 From the data contained in table 12, the provinces that can fall into this category include the Northern Cape, Free State, North-West and Mpumalanga. Mpumalanga, however, may be the exception. As data is assembled about its economic performance in the Maputo development corridor and until the patterns of labour migration from Mozambique are adequately understood, a different picture may emerge for the province. However, these indicators of trends in the labour market should be contrasted with other types of economic indicators so that an accurate picture is obtained of the potential to absorb new entrants, however skilled, into the labour market.

Further analyses can be made by using a range of covariates within the available data to clarify the understanding of the distribution of occupational skills within the South African labour market. The result of a locational distribution deploying similar principles of investigation to the provincial analysis that was shown above, is illustrated in table 13. What is evident from the data below is that almost 70% of the South African labour force are engaged in economic activities within the urban domain. The remainder can be classified as forming part of the rural location with agriculture being the largest employment sector for the rural population.

Further examination of table 13 reveals that the representation of skilled and semiskilled occupations is greater in urban areas than in the rural domain. In fact, a converse situation can be noted when comparing the urban with the rural domain: there is a greater prevalence of unskilled occupations in the rural part of the national economy when compared with the urban part. Qualifications, which can therefore be classified as forming part of the skilled employment categories, will guarantee that there is a greater demand for incumbents holding such qualifications and skills. Even within the public sector, where the process of restructuring is still under way, the demand for unskilled labour has decreased and technical staff (such as nurses and teachers) have experienced a reduction in labour demand. Many technical staff, who were retrenched through public sector restructuring, have been redeployed in the private sector and, sometimes, may even find their way back into the public sector. However, redeployment often occurs under different conditions and with modified job functions. Highly skilled managers and professionals have continued to demonstrate a high labour demand. This is dispersed among a range of employment sectors.

The real implication of this for the exploratory study (and its assumed effect) is that lower and semiskilled persons in both rural and urban areas would be hard pressed to find jobs. The challenge is simple: lower skilled and semiskilled persons will have to become double or multiskilled in order to get a job, given the current economic constraints. This would also apply to people with ‘intermediate skills’ (for example, basic computer literacy and basic management skills).

During the exploratory study, it was found that many of the respondents had moved to urban (core) areas in the hope of finding employment. However, they are challenged to enhance their individual skills especially in the urban areas. As argued above, it is imperative for new entrants to possess the skills for occupations in which the labour demand is growing if they are to participate effectively in the urban economy. Invariably, groups classified in high-skilled occupations are best placed to select from the employment options that are made available. Within the semiskilled categories, the freedom to be selective about employment options is more constricted and therefore the supply of labour exceeds its demand. This equips employers with a more flexible license to select the incumbents who are hired. This scenario intensifies when moving from the semiskilled towards the unskilled employment categories.112

People in need of jobs will have to upgrade their skills or ‘multiskill’ themselves if they wish to increase their chances of finding employment. This may be facilitated (apart from the individual choice to do so) through government support, community initiatives, non-governmental organisations (NGOs) and perhaps even international donors. The problem with the latter option, however, is mainly as a result of so-called ‘donor fatigue’. Two reasons for this could be:

the inability of authorities to oversee and implement funded projects through best practice (due to the lack of skills and/or capacity); or



the perception of misappropriation of funding that was brought about under apartheid rule and that seemingly persists.

By refracting the provincial analysis illustrated in table 12 onto the locational analysis in table 13, a more comprehensive picture can be discerned. This can be further enhanced by specifying the placement of each of the occupational categories in the distribution of national employment. This facilitates a better understanding of the employment trends within each occupational category, particularly trends depicting employment growth and cycles of employment contraction, or even instances where employment levels remain static.

The concentration in skilled employment based on province and location (see table 14) shows that, with the exception of the Northern Province, skilled workers are concentrated in urban areas of the national economy. While the national average is 85.07%, the percentage of skilled employment based within the urban economy of particular provinces range from 98.13% in Gauteng to 69.37% in Mpumalanga. Nonetheless, in terms of the placement of skilled personnel who enter the labour market, the rural domain cannot be ignored. While there is a smaller pool to draw from in terms of labour demand in the rural economy, entrants to the labour market who have the requisite skills, in all likelihood, may experience less intensive competition from other job seekers for limited employment opportunities. Within the urban economy, this process would be considered as normal in most cases. In fact, as a proportion of overall employment in each province, at least one-quarter of all skilled jobs are based in the rural areas of the provinces of the Eastern Cape, North-West, Mpumalanga and the Northern Province, as was mentioned earlier.

It is incumbent upon the organisers of all employment placement programmes to exploit these niche areas, which exist by maximising the number of placements within each skill category in every province where the labour demand for skilled jobs exists. To some extent, this will mitigate the trend of outward migration to urban areas and to provinces that have a more dynamic labour market. Consequently, the economic spin-offs to skills dispersion in particular provinces, and towards the rural economy in particular, will strengthen the perseverance of economic activities in rural areas, thus mitigating rural-urban migration.

The analysis of semiskilled employment categories by province and location is shown in table 15. With the exception of the Western Cape, which has a higher concentration of semiskilled workers compared to skilled workers, there is a definite tendency for semiskilled occupations to be concentrated in the urban economies of each province.

As can be observed in table 15, eight of the nine provinces exhibit this trend. The Northern Province is the only province where this is different. Unless there is an increase in the labour demand for higher levels of semiskilled labour in the medium term, the trend will continue systematically. In this respect, the North-West represents an interesting scenario because the relative proportions of semiskilled labour demand between the rural and the urban economies are still evenly balanced. A rapid escalation in this ratio will confirm the evidential trend of employment demand for higher level skills shifting from the rural sphere and being concentrated in the urban economy.

When considering the trends in the shifts in skilled and semiskilled employment that were illustrated in tables 14 and 15, a significant postulate must be accepted. Labour demand will be the strongest for skilled and semiskilled occupations throughout the economy. This is particularly relevant for the reinsertion of former combatants. No employment placement programme, which hinges the attainment of its objectives on the placement in unskilled occupations, will be successful without obtaining temporary relief from government-supported public works programmes. Moreover, if it involves new entrants into the labour market or if it requires accommodating redeployed personnel from one sector to another, the unskilled occupational category will not be the place where this will happen. In the absence of unrestrained fiscal measures, other strategies have to be planned and executed within reasonable timeframes to avoid unskilled labour from becoming disillusioned with the effects of structural unemployment. Programmes for the systematic and accelerated retraining of employees who potentially face such scenarios should perhaps be devised so that they could compete effectively for new positions that become available as labour demand strengthens for the skilled and semiskilled employment categories.

The analysis of unskilled employment by province and location shows (see table 16) that, in seven of the nine provinces, unskilled employment is almost overwhelmingly associated with the rural economy. The exceptions remain the highly urbanised provinces of Gauteng and the Western Cape, where concentrations of unskilled employment are attached to the urban economy.

A continuation of the process of employment decline, which has taken place throughout the country and particularly in the agricultural sector, merely aggravates the transference of excess unskilled labour from the rural to the urban economy. Over time, even with high levels of unemployment in the urban economy, unskilled labour will intermittently be involved in participating in economic activities, but this will not guarantee consistent full-time employment. An assessment of the labour demand in the unskilled categories, however, suggests that it will remain sluggish and eventually begin to record a slow and systematic decline in the future. This does not augur well for the demobilised individuals interviewed during the exploratory study who were not (yet) skilled or who did not indicate a willingness to enhance their skills to at least semiskilled or multiskilled levels.

Composition of the economically active population, 1999

The analysis of the economically active population on the basis of the occupational categories that have been used throughout the report and along the axes of race, gender, age and educational levels, provides further insights into the attributes of the South African labour market. Consistent with the analysis that has been provided above, it needs to be reiterated that the labour demand in the economy does not favour employment growth at unskilled levels. Indeed, the long-term trajectory of employment growth will be located within skilled and semiskilled occupations.

Table 17 provides a classification of the economically active population by race. While the analysis of the occupational change within the profile of those engaged in formal employment shows that employment is taking place at a faster pace in the upper echelons of the occupational spectrum, the data in table 17 shows that the economically active population in South Africa is still predominantly unskilled, and more so among the African and coloured groups, where 51.74% of economically active Africans and 48.08% of economically active coloureds fall into the unskilled employment categories. For both groups, less than one-fifth form part of the skilled segment. The occupational distribution among Asians and whites shows a higher predilection to skilled and semiskilled occupations. For the economically active white population, 51.17% are located in skilled occupations. Both groups thus have a higher capacity to participate effectively and respond to the changing skills needs of the economy.

The proportionate distribution of occupational categories along the lines of gender shows that the position of women and men are roughly similar, particularly in skilled occupations, while in the semiskilled occupations, men constitute a marginally higher proportion, and women do so in the unskilled occupations. The evidence that is contained in table 18 shows that men outnumber women within the economically active population by more than 1.5 million. Men outnumber women in the skilled occupations by 32.91% and by 53.06% in semiskilled occupations. Reinforcing the comparatively unequal position that women hold in relation to men, the absolute number of unskilled positions held by men exceeds those held by women by only 26.89%. This means that a higher proportion of women hold unskilled positions among the economically active population.

An analysis of the proportionate distribution of occupations by age group as is shown in table 19 highlights a number of interesting features. Without being overtly concerned with overall totals or overall proportions, the 45 to 54 and 55 to 64 age groups (45.75% and 50.75%, respectively) have the highest proportion of its economically active population occupying unskilled occupations while the age group with the lowest proportion are between 25 and 34 years old.

Within the semiskilled occupations, the age groups with the highest proportion are between 16 and 24 years old (44.73%) and between 25 and 34 years (38.99%). However, the 45 to 54 age group is shown to have a higher proportion of the economically active population within skilled occupations. However, in absolute terms, the bulk of the economically active population is drawn from age groups under 45 years of age. It is important to emphasise that the rather poor showing of the under 45 age group in skilled occupations is disconcerting. While these age groups constitute 75.3% of the economically active population, they only form 74.6% of skilled occupations and, at 80.95%, are marginally overrepresented in the semiskilled categories. The ideal is for the younger age groups to have a greater representation in skilled occupations.

A positive sign is the rather significant numerical difference in the number of skilled occupations held by those in the 35 to 44 age group compared to the older group mentioned above. The absolute numerical difference in the size of skilled occupations held between these two age groups shows some interesting features. Overall, the 35 to 44 age group outnumbers the 45 to 54 age group by 76.7%. Within the semiskilled occupations, this difference is exaggerated even further at 106.9%. The 35 to 44 age group therefore has a comparative advantage in terms of semiskilled occupations. Within the skilled occupations, this advantage is greatly diminished to 67.5%. This means that the 35 to 44 age group is not performing as well when compared to the 45 to 54 age group.

In the exploratory study conducted among former SANDF personnel and demobilised combatants, the need for skills development among younger, as well as older participants seemed to be pointing towards a sustained strategy to assist people to find their niche as semiskilled or multiskilled persons.

Table 20 provides a systematic numerical breakdown of the educational qualifications of the economically active population.

Individuals with low levels of qualifications (none, primary and lower secondary) dominate the unskilled occupations. A higher proportion of economically active individuals who have a lower secondary and matric qualification dominate the semiskilled occupations. Finally, over three-quarters (77.26%) of economically active individuals who have a tertiary qualification are based in skilled occupations. Hall and Roodt recently confirmed these findings in their extensive study on the Skills needs of the South African labour market: 1998-2003. 113

While job opportunities may become available in the manufacturing sector, research cautions that 71 000 jobs may be lost in semiskilled and unskilled categories.114 This points to the need to multiskill persons who wish to (re)enter the job market.

In terms of the agricultural and tourism sectors, it is expected that less than 50 000 jobs will be created in these sectors in the three years up to 2003. Hall and Roodt caution against undue optimism, but remark that moderate growth in the building and civil engineering sectors (construction sector) can be expected.115 The largest growth is expected in the wholesale, retail and accommodation sectors. Moderate growth is expected in wholesale and retail and faster growth in the catering and accommodation sectors.116

This reiterates the need to discern niche markets and areas of preference, as well as potential areas for training in the agricultural sector (small farming/large-scale farming, co-operative farming, bio-farming), catering and accommodation sectors and, to a lesser extent, the wholesale and transport sectors. Other areas in relative demand and with some growth potential (provided that negative scenarios such as crime do not deter tourists) are tourism, the tourism-related industries and eco-tourism (with community involvement). Provinces such as the Eastern Cape, Northern Province, Mpumalanga, Western and Northern Cape could benefit form the tourism sector.

The conclusion that can be drawn is that increased public and private investment in tertiary education will have a concerted impact on the direction of labour demand that, as the preceding analysis has shown, does indeed favour the growth in skilled and semiskilled occupations. However, such investment will have to take cognisance of the fact that job creation in South Africa is expected to be minimal for newcomers to the job market on almost every skills level.

Job opportunities and skills needs

One of the guiding principles of the National Skills Development Strategy is that skills development should be demand-led. By this it is meant that a realistic assessment should be made of how skills are to be deployed based on existing demands in the economy. The emphasis should be on skills and competencies required to support productivity, international competitiveness, the mobility of workers, self-employment and the meeting of defined and articulated community needs.

The exploratory study also considered the existing demands in the economy and the willingness among potential employers to employ former SANDF personnel and demobilised combatants. Unfortunately, responses were extremely difficult to subtract. The low response rate made proper analysis impossible. However, the experiences gained during the course of this exploratory study are worth mentioning.

Potential employers showed a remarkable unwillingness to engage in a study of the employability of demobilised SANDF personnel. The reasons for the low response rate and negative attitudes that were aired during telephone interviews, can be described as due to the following:

lack of knowledge about the demobilisation issue;



apathy with regard to job creation and the employment of unskilled persons;



disillusionment as a result of past experiences with former soldiers and/or unskilled persons (this could also perhaps relate to the ‘total onslaught’ era when companies and private businesses were forced to remunerate soldiers who were called up for duty in the border wars in Namibia and Angola despite their absence from work);



lack of time or resources to respond, or the lack of co-operation or staff in human resources departments; and



possible adverse feelings towards former soldiers.