Ageing workforce to impact SA labour market

The white workforce in South Africa is ageing and this has implications in areas ranging from employment equity to the shortage of skilled individuals, the SA Institute of Race Relations (IRR) said in a report on labour market trends issued on Wednesday.

In 2015 close to half (48.5%) of what the IRR refers to as “African economically active people” were aged below 35. For the white population, about two-thirds (66.6%) of economically active people were aged 35 and above.

According to the report, the labour market participation rates of the different race groups show that the rate for Africans has picked up since 1994. However, it still lags behind that of the white population by roughly ten percentage points.

“Young Africans largely bear the brunt of unemployment. The number of unemployed people has increased faster than that of the employed. In addition, many unemployed people have been out of a job for several years, lessening the likelihood of again finding one,” according to the IRR.

There is also a correlation between education and employment, with the unemployment rate of people with a tertiary qualification being less than half that of people with only a primary education. The IRR regards the quality of South Africa’s schools as a central obstacle to the employment of young people.

The labour force absorption rate of Africans is very low at 40.7% – lower than in 2001 (42.1%). It is also about 20 percentage points below emerging market norms. The labour force absorption rate measures the proportion of the working-age population that is employed — in other words, all those who do any work for pay, profit, or family gain.

In 1994 there were on average 490 African people who were not working for every 100 employed African people. The average for the whole country in 1994 was 380 people not working for every 100 employed, compared to 250 not working for every 100 employed by 2015.

Another noteworthy trend according to the IRR is that South Africa’s female labour participation rates for all race groups are considerably lower than those of their male counterparts.

The IRR’s Frans Cronjé pointed out that although significant job growth has been recorded since 1994, that job growth has been skewed towards the relatively high-tech and high-skilled services economy.

Damaging laws and drop in competitiveness make their mark

“Labour market policies and the drop in domestic industrial competitiveness have prised poor people out of jobs and led to declines in the number of mining and manufacturing jobs, for example,” he said.

The number of mining jobs went down by 29.4% between 1990 and 2015. According to the IRR this correlates with steady domestic deindustrialisation since 1994, which occurred as a result of declining industrial competitiveness.

“Such declining competitiveness, driven in part by damaging labour laws, is the explanation for South Africa’s structural unemployment crisis. In the absence of policy reform, such reduced competitiveness will continue to depress job growth,” said the IRR.

According to Statistics SA there were 54 956 900 people in South Africa in 2015. About 35 955 000 were of working age, but only 20 887 000 (58.1%) of them were economically active. Fewer than half of working-age people (15 657 000) were employed.

Carin Smith, Fin24