South African employers have reported soft hiring intentions for the first quarter of 2020.
The latest ManpowerGroup Employment Outlook Survey shows that while 10% of employers forecast an increase in payrolls, 8% anticipate a decrease and 81% expect to make no changes.
Once the data is adjusted to allow for seasonal variation, the outlook stands at +2%, and is the weakest reported in more than five years. Hiring plans remain relatively stable when compared with the previous quarter but decline by three percentage points in comparison with the same period last year, ManpowerGroup reports.
“As we move into the new year, the South African economy continues to be affected by subdued economic growth and a sluggish growth outlook. Policy uncertainty and a high unemployment rate remain a deep concern for local businesses that are looking to the new year with caution when it comes to their spending and hiring strategies,” ManpowerGroup South Africa MD Lyndy van den Barselaar said on Tuesday.
In terms of regional comparisons, employers in three of the five regions covered by the survey expect to add to payrolls in the first quarter of 2020.
The strongest labour market is anticipated by Western Cape employers, who report a net employment outlook of +4%. This is, however, countered by limited job gains forecast in Gauteng and KwaZulu-Natal, with outlooks of +3% and +2%, respectively.
Further, Eastern Cape employers report downbeat hiring prospects with an outlook of -5%, while the Free State outlook stands at -1%.
According to Van den Barselaar, the Western Cape government continues to focus on development in the region through several initiatives, such as focusing on diversifying the province’s energy mix through an uptake in sustainable energy sources.
This, Van den Barselaar said on Tuesday, could create employment for those with skills in developing, installing and maintaining sustainable energy infrastructure such as solar photovoltaic panels, for example.
Another provincial initiative looks to encourage direct engagement between the government and the private sector, with sectors such as construction, manufacturing, information technology, business process outsourcing and transport participating.
“These kinds of initiatives look to spur growth and promote job growth, which could contribute to the positive outlook for the province in the coming quarter,” she commented.
Eastern Cape employers, meanwhile, report a considerable decline of 13 percentage points when compared with the previous quarter, and outlooks also weaken by five and three percentage points in the Free State and KwaZulu-Natal, respectively. Elsewhere, hiring prospects remain relatively stable in Gauteng and the Western Cape.
Turning towards sector comparisons, the survey shows that employers in six of the ten industry sectors expect to increase payrolls during the forthcoming quarter.
The strongest hiring pace is forecast in the finance, insurance, real estate and business services sector, where the net employment outlook is +9%.
Some hiring opportunities are expected in the wholesale and retail trade sector and the agriculture, hunting, forestry and fishing sectors, with outlooks of +7% and +5%, respectively, while the restaurants and hotels sector outlook is +4%.
Meanwhile, employers in three sectors expect to trim payrolls, most notably reflected in outlooks of -9% for the construction sector and -6% for the transport, storage and communications sector.
“As businesses in South Africa look to digital transformation to shift the way they see and do business, the country moves toward becoming part of the Fourth Industrial Revolution (4IR). These kinds of changes are spurred by the business services sector,” Van den Barselaar points out.
Additionally, she says that, as businesses and individuals look to make better financial decisions in a challenging economic climate, the financial services and insurance sectors will become more prevalent.
“It is possible that these factors are contributing to the expected growth in the sector,” Van den Barselaar notes.
Hiring sentiment weakens in eight of the ten industry sectors in a comparison with the final quarter of 2019.
Public and social sector employers report the most noteworthy decline of six percentage points, while outlooks are five and three percentage points weaker in the construction sector and the restaurants and hotels sector, respectively.
Elsewhere, decreases of two percentage points are reported in three sectors – the finance, insurance, real estate and business services sector, the manufacturing sector and the transport, storage and communications sector.
However, the wholesale and retail trade sector employers report a quarter-over-quarter improvement of four percentage points.
In a comparison with this time a year ago, outlooks declined in seven of the ten industry sectors.
Additionally, considerably weaker hiring plans are reported in the transport, storage and communications sector and the construction sector, decreasing by 17 and 12 percentage points, respectively.
The mining and quarrying sector employers report a decline of eight percentage points, and the agriculture, hunting, forestry and fishing sector outlook is seven percentage points weaker. Meanwhile, outlooks improve by eight percentage points in the manufacturing sector and by four percentage points in the finance, insurance, real estate and business services sector.
For the global outlook, in the ManpowerGroup research for the first quarter of 2020, employers in 42 of 43 countries and territories surveyed expect to grow payrolls in the period up to the end of March 2020.
The strongest labour markets are anticipated in Greece, Japan, Taiwan, the US and Romania, while the weakest hiring activity is expected in Panama, Argentina, Costa Rica, Italy and Spain.
When compared with the previous quarter, hiring plans will strengthen in 15 of the 43 countries and territories, while employers in 23 report weaker hiring prospects, with no change reported in five.
In a comparison with last year at this time, employers in 12 countries and territories reported stronger hiring sentiments, while hiring intentions weakened in 26 and were unchanged in five.