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Employment trends in South Africa of 45

E M P L O Y M E N T T R E N D S

I N S O U T H A F R I C A

A N D T H E S U P P L Y A N D D E M A N D

F O R S K I L L E D L A B O U R

A RESEARCH REPORT PREPARED FOR SOLIDARITY BY

JCP INTERNATIONAL


TABLE OF CONTENTS

1

2

3

3.1

4

4.1

4.2

5

5.1

5.2

5.3

5.4

5.5

5.6

6

6.1

6.2

6.3

6.4

7

7.1

7.2

7.3

7.4

7.5

8

8.1

8.2

8.3

9

EXECUTIVE SUMMARY

CURRENT EMPLOYMENT SITUATION

HISTORICAL FACTORS AFFECTING THE LABOUR MARKET

The impact on race, gender, education and occupation

FACTORS OF UNEMPLOYMENT

Categories of unemployment

Factors of unemployment

EMPLOYMENT TRENDS IN THE LABOUR MARKET

Demand for labour

Trends in the demand for labour

Supply of labour

The employment gap

Trends in the supply of labour

The forecast employment gap

DEMAND FOR SKILLS

Demand for skills

High skills sectors

Intermediate skills sectors

Low skills sectors

SUPPLY OF SKILLS

Higher education trends

Field of study

Supply of high skills

Supply of intermediate skills

Supply of low skills

DIVERSIFICATION OPPORTUNITIES FOR SOLIDARITY

Solidarity’s position in the training landscape

Strategic approach

Partnerships and alliances

REFERENCES AND OTHER READINGS

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1. EXECUTIVE SUMMARY

This report examines the current employment situation in South Africa and

then looks at historical factors that affect employment levels as well as factors

of employment.

It then further looks at employment trends, and the demand for and supply of

labour. This is followed by an analysis of the demand for and supply of skills,

with some reference to scarce skills.

It then identifies opportunities for diversification based on the trends identified

in this report.

1.1. The current employment situation

Employed 11 392 000

Unemployed 4 415 000

Economically active 15 807 000

Not economically active 13 324 000

Total aged 15 – 65 29 131 000

Unemployment rate 27,9%

The current number of discouraged people of working age is 3 948 000.

This is nearly equal to the official unemployment number of 4 135 000, so

the unemployment statistics given above are significantly understated if

discouraged, working age people were to be included. This is called the

“wide” definition of unemployment and stands at 8 083 000.

Employment figures per sector as at September 2004 are:

Agriculture 1 063 000

Mining 405 000

Manufacturing 1 714 000


Utilities 99 000

Construction 824 000

Trade

Transport

Finance

Community services

Private households

Other

2 542 000

563 000

1 147 000

2 158 000

1 075 000

26 000

1.2. Historical factors affecting the labour market

South Africa began to feel the effects of changes in the external political

environment in the late 1960’s and early 1970’s as pressure was bought to

bear on the government to remove discriminatory labour legislation.

Coupled with an increasing population, a stagnant economy and internal

labour strife, the government eased some of the restrictions to allow other

racial groups more access to labour markets.

Over time, this resulted in a protected economy and a racially divided work

force. In 1994, economic sanctions were phased out and South Africa was

able to once again attract foreign investment. However, the world economy

had changed significantly, as had South Africa’s from the 1960’s. Sectors

such as mining and agriculture had seen declines in output as a

percentage of Gross Domestic Product as the economy and employment

shifted to the services sector.

A factor further complicating this was the shift in capital to labour ratios in

sectors that were labour intensive. This was driven by the need of

employers to reduce labour costs as well to reduce their reliance on the

sometimes volatile labour market that was in turmoil in the 1980’s. The

result of these factors was that the labour market was shrinking in relative

terms and the skills needed to meet a more capital intensive, technology

oriented economy were lacking.


1.3. Factors of employment

The following categories of unemployment have been identified by the

Human Sciences Research Council.

Factors of employment

27%

35%

17%

14%

6% 1%

Poorly educated rural unemployed

Young unemployed, no labour market experience

Poorly educated urban unemployed

Labour market experience with some education

Long-term unemployed, no labour market experience

Highly educated, unemployed

The Department of Labour has identified the following causes of the high

rate of unemployment in South Africa.

• The Structure of Production

• The Level of Investment

• Human Development

• Labour Market Regulation

Other causes not mentioned by the Department are:

• Strong local currency

• Global competition

• Employment equity targets


1.4. Employment trends in the labour market

A statistical trend analysis of current sector employment numbers was

conducted using statistical software. This is a relatively mechanistic

forecast, and assumes that current trends will continue.

Sector employment trends

1.5. Population trends

Statistics SA projects a total population of 48,2 million in 2005, excluding

forecast deaths from HIV/AIDS, and 46,5 million taking HIV/AIDS into

account.

The South African population is expected to reach nearly 50 million by

2009. These estimates are not adjusted for AIDS related deaths.

Put simply, the supply of employable labour continues to grow faster than

the economy can employ them. Currently, the number of people of

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1994 2001 2004 2006 2009

Employees

Trade Community services Finance Private households

Agriculture Construction Transport Mining

Utilities Manufacturing Other


employable age is 29 million. In 1970, the total population of South Africa

stood at around 22 million.

Population trends

1996

2001

2004

2006

2009

% 2004

to 2009

40,583,573 44,819,778 46,586,607 47,928,700 49,695,520 6.26%

1.6. The demand for skills

A HSRC research report into scarce skills identifies 3 sectoral bands that

require different levels of skills. These are:

• High skills sector – chemical, pharmaceutical, petroleum, etc.

• Intermediate skills sector – engineering, metal working, machine tools,

etc.

• Low skills sector – meat, rubber, leather, etc.

They further suggest that an over-emphasis is placed on the high skills

sector, to the detriment of the intermediate and low skills sectors. These

latter sectors are still very much in evidence in South Africa.

A different approach would be required each sector, with an emphasis on

the appropriate skills delivered by the appropriate service provider or

education body.

1.7. Scarce skills

High level scarce skills

• Engineering marketing


• Industrial engineering

• Pricing

• Contracting

• Trading

• Project management

• Operations management

• Professional engineers in mining, chemical, metallurgical, electrical and

mechanical fields

• Computer skills

• Risk assessment

• Management and supervisory skills

The scarcity is felt even more in finding skilled Black African employees

with these skills, and these skills are regarded as mostly very scarce to

critically scarce.

The Chemical Industries Education and Training Authority (CHIETA)

reports that high end skills needed within the various chemical industries

are mainly at the NQF 7 – 8 levels. Around 1% of doctoral graduates are

from this sector, and this is not in alignment with current growth trends.

The financial services sector continually experiences shortages of qualified

auditors and accountants, especially Black Africans. Of the 20 000

currently registered Chartered Accountants, 2 000 live abroad.

The banking sector is undergoing change due to competitive and

regulatory pressures and skills are needed in IT, management, regulatory,

risk & loan management and back office administration.

The IT and telecommunications industry experienced growth in

employment, mainly in the electronics and IT sectors, whilst

telecommunications employment has declined as the cellular networks

have matured and Telkom has privatised to a large extent. This has not


affected employees with high skills as much as those with intermediate

skills.

The manufacturing sector is becoming more export oriented, especially the

motor vehicle industry, and demand for highly skilled engineers and

managers is picking up.

Intermediate level scarce skills

At artisan level, a shortage of skilled fitters, plumbers, welders, turners and

electricians exists. This shortage has been experienced for many years,

with SASOL suggesting an overall shortage of 20 000 artisans in 2003.

Mining skills needed are:

• Technical and craftsmen as millwrights, boilermakers and electricians

• Rock engineering

• Underground hard rock

• Surface mining

• Health and safety

• Team building and problem solving

CHIETA identified the following skills needs at the intermediate level:

• Technical and operational experience, especially amongst females

• Sheet metal workers and millwrights

• Analyser technicians

• Pipe fabricators

• Rotating equipment artisans

1.8. The supply of skills

Research conducted into student’s behaviour with regard to further

education and employment has interesting implications for higher

education (HE) and skills development strategies.


The key findings of this study conducted in 2002 were:

• 73% of learners intend to enter HE within the next 3 years.

• The main reason given was to enhance employability, with nearly 90%

of respondents viewing HE as a gateway to employment.

• External funding of HE is more important for African Blacks than other

race groups.

• Family and friends exert greater influence on African Blacks than other

race groups.

• Learners who have parents with HE are three time more likely to aspire

to HE.

• A learner with a sibling is two time more likely to aspire to HE. This is

the most significant predictor in determining whether a learner wishes to

study further.

Supply of high level skills

In general, the supply of highly skilled people should match demand over

the next five years if the education system can deliver the skills to those

who demand it. There is certainly no shortage of learners wishing to be

trained in these skills.

Supply of intermediate skills

FET colleges and public institutions have become increasingly under

pressure to improve their funding ratios as government funding has

declined. This has resulted in a more market oriented approach to

developing skills, and these training providers are competing with private

sector training providers for corporate and individual learners.

Private training institutions are also offering courses that meet the

aspirations of those learners seeking vocational training to make them

more employable.


Approximately 70% of technikon graduates acquire these intermediate

skills, as do 45% of FET graduates. With regard to learnerships,

approximately 47% of learners will achieve or have achieved this level of

skills.

With regard to the value or effectiveness of FETs, it was found in research

conducted in 2001 that 81% of grade 12 learners entered FETs exited with

an N3 qualification. This is an equivalent level qualification undertaken by

learners to improve their employability, but without improving their overall

skill levels.

This did not provide the help they needed, as the survey found that only

33% of FET graduates became employed.

1.9. Diversification opportunities for Solidarity

Many opportunities for Solidarity arise out of the above research. The

salient points to note, in no particular order are:

• The main skills shortage is at the intermediate level

• The most acute problem in terms of unemployment trends is in the

labour intensive industries such as mining, agriculture and textiles.

Some sections of manufacturing engaged in exports are also under

pressure.

• Growth in employment will be in the financial services sector,

construction and manufacturing.

• The high number of learners studying mathematics at standard grade

and not the higher grade.

• The inability of FETs to deliver skilled learners back into the workforce

• SETA learnerships are not always aligned with industry needs

• The relatively high numbers of learners who intend obtaining higher

education qualifications, mainly in manufacturing, engineering and

technology fields as well as business and commerce fields


Solidarity has three dimensions of opportunities for diversification. These

are members, skills and industry sectors.

Members

Solidarity should reach out to grade school learners by offering them

appropriate, relevant skills and knowledge based training when they

graduate from school. It is apparent that many learners have the desire to

learn technical skills, and this desire could be tapped into by Solidarity.

A further opportunity arises when one considers the large number of

retrenched members who are no longer active contributors because of

their financial predicament. A skills audit should be conducted to identify

their current skills, and a training plan developed to up-skill retrenched ex-

members. They could then at least look for employment with their new

skills in the same or different industries.

Skills

Solidarity should form partnerships with private and public training

institutions in each province to offer learnerships and specialised training.

FETs in particular would benefit from this partnership.

Much of the current skills based training is vocational in its approach. The

demand for employees with knowledge of mathematics and science at a

higher grade will continue to grow. Currently, too few learners are

graduating at the higher grade, and this will increase the skills and

employment gap.

Solidarity should develop programmes in conjunction with training

providers that offer learners, members and ex-members the opportunity to

upgrade their mathematics and science skills. Other type of programmes

should also be developed that focus on skills that knowledge workers need

to acquire.


Solidarity also should develop programmes that provide skills that are

relevant in the services sector, especially in that of financial services. This

provides the opportunity for members at risk of retrenchment in some

sectors to develop skills that could be transferred to a new sector.

Other type of skills training could be in the area of entrepreneurship, so

that retrenched members are at least able to become self-employed, using

the skills that they have developed in the SMME business environment.

Industry sectors

The changing nature of work and employment, from commodity based

industries to service based industries has a long term effect on the

demand for skills.

Solidarity should identify the core skills needed by employees in other

sectors that show growth, and, with training providers, develop training

courses that up-skill existing members, as well provide relevant training for

new members and the unemployed.

This will allow Solidarity to make inroads into new industry sectors.


2. CURRENT EMPLOYMENT SITUATION

The current employment statistics released by Statistics South Africa1 show

the following:

Employed 11 392 000

Unemployed 4 415 000

Economically active 15 807 000

Not economically active 13 324 000

Total aged 15 – 65 29 131 000

Unemployment rate 27,9%

The employment rates per age band are as follows:

15 – 24 51,8%

25 - 34 29,8%

35 – 44 18,3%

45 – 54 12,4%

55 - 65 7,2%

Unemployment by race group currently stands at:

Black African 31,3%

Coloured 21,8%

Indian/Asian 13,4%

White 5,4%

Employment figures per sector as at September 2004 are:

Agriculture 1 063 000

Mining 405 000

Manufacturing 1 714 000

Utilities 99 000


Construction 824 000

Trade

Transport

Finance

Community services

Private households

Other

2 542 000

563 000

1 147 000

2 158 000

1 075 000

26 000

The unemployment rate per province for September 2004 was as follows:

Western Cape 18,6%

Northern Cape 24,5%

Mpumulanga 24,8%

Gauteng 25,7%

Limpopo 27,8%

Northwest

Free State

Kwa-Zulu Natal

Eastern Cape

28,0%

28,6%

28,7%

29,6%

The above numbers do not take into account those people who are capable of

being economically active, but are not seeking employment because they

have been discouraged in their efforts to find work.

The current number of discouraged people of working age is 3 948 000. This

is nearly equal to the official unemployment number of 4 135 000, so the

unemployment statistics given above are significantly understated if

discouraged, working age people were to be included. This is called the “wide”

definition of unemployment and stands at 8 083 000.

This survey does not indicate how many are employed in the informal sector,

but current estimates are in the region of two million.


3. HISTORICAL FACTORS AFFECTING THE LABOUR MARKET

South Africa began to feel the effects of changes in the external political

environment in the late 1960’s and early 1970’s as pressure was bought to

bear on the government to remove discriminatory labour legislation. Coupled

with an increasing population, a stagnant economy and internal labour strife,

the government eased some of the restrictions to allow other racial groups

more access to labour markets.

Over time, this resulted in a protected economy and a racially divided work

force. In 1994, economic sanctions were phased out and South Africa was

able to once again attract foreign investment. However, the world economy

had changed significantly, as had South Africa’s from the 1960’s. Sectors

such as mining and agriculture had seen declines in output as a percentage of

Gross Domestic Product as the economy and employment shifted to the

services sector.

A factor further complicating this was the shift in capital to labour ratios in

sectors that were labour intensive. This was driven by the need of employers

to reduce labour costs as well to reduce their reliance on the sometimes

volatile labour market that was in turmoil in the 1980’s. The result of these

factors was that the labour market was shrinking in relative terms and the

skills needed to meet a more capital intensive, technology oriented economy

were lacking.

As employers look for scarce skills that are not available, they are increasingly

tempted to shift to capital intensive methods. This re-enforces the

unemployment problem.

3.1. The impact on race, gender, education and occupation

• Race


Employed Blacks were doubly disadvantaged as labour intensive

industries declined in favour of sectors that used capital intensive

technology. They were now unemployed and lacked the skills needed to

re-enter the labour market. This shift benefited skilled, White workers.

• Gender

Capital intensive sectors have greater demand for female employees, as

does the services sector. This resulted in an increase in employment for

women in the workplace.

• Education

Workers with little or no education have seen a decline in demand for their

labour, while Grade 12 and university educated people are most in

demand.

• Occupation

Labour demand became more biased towards skilled employees, and as

the economic output of more labour intensive sectors declined, so did

demand for unskilled workers.


4. FACTORS OF EMPLOYMENT

4.1. Categories of unemployment

There are several categories of unemployed, ranging from those with no

education or work experience, to those who have tertiary education and work

experience. A research report by the HSRC3 has identified the following

categories and their contribution to unemployment.

Table 7 – Categories of unemployed

Poorly educated rural unemployed 27%

Young unemployed, no labour market experience 35%

Poorly educated urban unemployed 17%

Labour market experience with some education 14%

Long-term unemployed, no labour market experience 6%

Highly educated, unemployed 1%

Chart 3 – Categories of unemployment

27%

35%

17%

14%

6% 1%

Poorly educated rural unemployed

Young unemployed, no labour market experience

Poorly educated urban unemployed

Labour market experience with some education

Long-term unemployed, no labour market experience

Highly educated, unemployed


It is apparent that low levels of education or no education account for 58%

of the unemployed. Another 41% have no market experience, in spite of

having a reasonable level of education.

4.2. Factors of unemployment

The Department of Labour4 has identified the following causes of the high

rate of unemployment in South Africa.

The Structure of Production

The South African economy is not labour absorbing due to the inherited

capital intensive structure of the economy and the choice of technologies.

South Africa is presently facing a situation where large declines in

traditionally employment absorbing sectors such as mining occur without

sufficient gains in other formal sector industries.

The Level of Investment

Most economies that have sustained real growth rates of 3% or more have

had investment and savings levels in excess of 20% of GDP. To generate

sufficient employment opportunities, South Africa requires real growth

rates that are far higher. South Africa’s level of investment fell to very low

levels in the 1980s and early ‘90s, only recently recovering to 20% of GDP

by 1996.

Human Development

Resources are poorly distributed, including key forms of infrastructure,

education and social services. This limits access to economic opportunities

both in terms of entrepreneurship and employability in the formal sector.

Labour Market Regulation

Racially restrictive labour regulation in South Africa led to severe

distortions in the labour market, caused by unequal access to education


and training, to occupational opportunity and to geographical mobility.

Unemployment, employment and wage earnings continue to be associated

to a large degree with race. In addition, the skills shortage that was caused

by apartheid policies encouraged firms to adopt capital intensive methods

of production.

Other causes not mentioned by the Department are:

Strong local currency

The strength of the Rand, especially against the US dollar has made many

exports unprofitable. This has reduced exporter’s operating margins,

resulting in retrenchments.

Global competition

South Africa has dropped many tariff barriers to imported goods, resulting

in increasing competition from other countries that have access to the

South African market. In many instances, the local cost structures are not

competitive. This is notable in the textile industry, which is severely

threatened by relatively cheap imported goods from east Asian countries.

Over-regulated labour markets

It is far more difficult to fire an employee than to hire one. Whilst this

protection has given some stability in the work force, it has made many

employers cautious about hiring new staff.

Employment equity targets

This factor is not a direct cause of employees losing their jobs, but it is a

limiting factor in new enrolments. Many White employees are unable to

find employment, especially at the high skill end of the labour market as

employers struggle to recruit sufficient Black African staff to meet

employment equity target guidelines laid down by various sector charters.


5. EMPLOYMENT TRENDS IN THE LABOUR MARKET

In a Labour bulletin issued by Standard Bank SA2, this was said about

employment trends in South Africa;

“A key concern regarding the employment trends over the last couple of years

is often referred to as “jobless growth”, with non-agricultural employment

declining on average by 1.6% per year since 1995 despite average economic

growth in the non-agricultural sectors of more than 3% per year. This troubling

trend highlights one of the key structural problems in the South African

economy. The skills shortage means that economic growth does not

necessarily translate into job creation, because the mismatch of skills required

by and offered in the economy means that the surplus labour cannot be

absorbed into the economy.”

5.1. Demand for labour

An analysis of employment in the various sectors from 1994 to 2004

shows the following results.

Table 1 – Sector contribution to employment

Sector

1994

2001

2004

Growth

(1994 to

2004)

Agriculture * 1 184 712 1 051 000 1 063 000 -10,45%

Mining 432 857 487 000 405 000 -6,88%

Manufacturing 1 420 956 1 605 000 1 714 000 17,17%

Utilities 84 041 90 000 99 000 15,11%

Construction 433 492 594 000 824 000 47,39%

Trade 1 650 017 2 397 000 2 542 000 35,09%


Transport 469 200 543 000 563 000 16,66%

Finance 582 897 975 000 1 147 000 49,18%

Community services 2 151 382 1 988 000 2 158 000 0,31%

Private households * 800 887 1 055 000 1 075 000 25,50%

Other * 186 601 43 000 26 000 -617,70%

Totals 9 397 042 10 833 000 11 616 000 19,10%* Unreliable data

It is apparent that mining and agriculture have declined significantly over

the past 10 years, with trade, construction, finance, transport and

manufacturing showing reasonable growth. The dominant sectors are

trade, community services, manufacturing and finance. They account for

65% of formal employment in South Africa.

Chart 1 – Employment by sector in 2004

22%

19%

10%9%

9%

7%

5%

3%

1%

15%0%





Table 2 – Employment by sector (%)

Sector % TotalTrade 21.88%Community services 18.58%Manufacturing 14.76%Finance 9.87%Private households 9.25%Agriculture 9.15%Construction 7.09%Transport 4.85%Mining 3.49%Utilities 0.85%Other 0.22%

5.2. Trends in the demand for labour

A statistical trend analysis of current sector employment numbers was



Table 3 – Sector employment trends to 2009

Sector 1994 2001 2004 2006 2009 % 2004 to 2009

Trade 1,650,017 2,397,000 2,542,000 2,600,000 2,687,000 5.40%

Com. services 2,151,382 1,988,000 2,158,000 2,328,000 2,498,000 13.61%

Finance 582,897 975,000 1,147,000 1,284,148 1,456,148 21.23%

P’ households 800,887 1,055,000 1,075,000 1,080,000 1,095,000 1.83%

Agriculture 1,184,712 1,051,000 1,063,000 1,074,997 1,086,997 2.21%

Construction 433,492 594,000 824,000 1,020,273 1,216,546 32.27%

Transport 469,200 543,000 563,000 570,000 583,000 3.43%

Mining 432,857 487,000 405,000 323,000 241,000 -68.05%

Utilities 84,041 95,000 99,000 101,574 105,574 6.23%

Manufacturing 1,420,956 1,605,000 1,714,000 1,819,007 1,982,007 13.52%

Other 186,601 43,000 26,000 20,000 9,000 -188.89%

Total 9,397,042 10,833,000 11,616,000 12,223,005 12,962,281 10.39%


Chart 2 – Sector employment trends

Again it can be seen that the strongest sectors are finance, construction

and manufacturing. The mining and agriculture sectors are likely to

continue with low or negative growth.

5.3. Supply of labour

Put simply, the supply of employable labour continues to grow faster than

the economy can employ them. Currently, the number of people of

employable age is 29 million. In 1970, the total population of South Africa

stood at around 22 million.

Statistics SA projects a total population of 48,2 million in 2005, excluding

forecast deaths from HIV/AIDS, and 46,5 million taking HIV/AIDS into

account.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1994 2001 2004 2006 2009

Employees





Table 4 – Population growth in South Africa (1996 to 2004)

Race 1996 2001 2004 Growth

Black African 31 127 631 35 416 166 36 934 181 15,72%

Coloured 3 600 446 3 994 505 4 086 790 11,90%

Indian/Asian 1 045 596 1 115 467 1 131 342 7,58%

White 4 434 697 4 293 640 4 434 292 -0,01%

Other 375 204

Totals 40 583 573 44 819 778 46 586 607 12,89%

5.4. The employment gap

From the above tables, the gap between employed people and the

increase in population can be determined.

Table 5 – Employment gap

2001 2004 Growth

Total employed 10 833 000 11 616 000 783 000

Population 44 819 778 46 586 607 1 766 829

Between 2001 and 2004, 783 000 new jobs were created, while 1,7 million

people were added to the population.

Although the employment figure as a percentage of the total population

remains constant at around 25%, the total number of unemployed will

continue to rise if the factors causing unemployment are not addressed.

5.5. Trends in the supply of labour

A statistical trend analysis of current and past population figures was




Table 6 – Population trends to 2009

1996

2001

2004

2006

2009

% 2004

to 2009

40,583,573 44,819,778 46,586,607 47,928,700 49,695,520 6.26%

5.6. The forecast employment gap

It is apparent that although a forecast 1 346 281 new jobs will be created

by 2009, the population will have grown by a forecast 3,1 million.


6. DEMAND FOR SKILLS

6.1. Demand for skills

A HSRC research report3 into scarce skills identifies 3 sectoral bands that

require different levels of skills. These are:

• High skills sector – chemical, pharmaceutical, petroleum, etc.

• Intermediate skills sector – engineering, metal working, machine tools,

etc.

• Low skills sector – meat, rubber, leather, etc.

They further suggest that an over-emphasis is placed on the high skills

sector, to the detriment of the intermediate and low skills sectors. These

latter sectors are still very much in evidence in South Africa.

A different approach would be required each sector, with an emphasis on

the appropriate skills delivered by the appropriate service provider or

education body.

6.2. High skills sectors (NQF 6 – 8)

In order to remain competitive as a nation, South Africa must ensure that it

develops those skills to productively use capital equipment and manage

the labour force.

It also needs to address the accumulated backlog of skills as a result of

the apartheid era.

Table 7 – High skills needs

Occupation Employed 2001 Required over next

5 years

Academic 37 237 6 651


Doctors 34 370 5 207

Nurses 155 516 35 461

Computer professionals 75 841 3 120

Educators 354 469 14 615

Engineers 29 824 1 023

Engineering technologists 32 132 1 195

Managers 280 298 9 026

ESKOM identifies its high skills shortages as being scarce, very scarce

and critical.

Scarce skills are:

• Electrical engineering

• Engineering marketing

• Industrial engineering

Very scarce skills are:

• Pricing

• Contracting

• Trading.

Critical skills are:

• Project management

• Operations management.

The scarcity is felt even more in finding skilled Black African employees

with these skills, and these skills are regarded as mostly very scarce to

critically scarce.


The mining industry has identified many scarce skills needed. The Mining

Qualifications Authority5 (MQA) has identified the following high end skills

in its Sector Skills Plan as:

• Professional engineers in mining, chemical, metallurgical, electrical and

mechanical fields

• Computer skills

• Risk assessment

• Management and supervisory skills

The Chemical Industries Education and Training Authority6 (CHIETA)

reports that high end skills needed within the various chemical industries

are mainly at the NQF 7 – 8 level. Around 1% of doctoral graduates are

from this sector, and this is not in alignment with current growth trends.

The financial services sector continually experiences shortages of qualified

auditors and accountants, especially Black Africans. Of the 20 000

currently registered Chartered Accountants, 2 000 live abroad.

The banking sector is undergoing change due to competitive and

regulatory pressures and skills are needed in IT, management, regulatory,

risk & loan management and back office administration.

The IT and telecommunications industry experienced growth in

employment, mainly in the electronics and IT sectors, whilst

telecommunications employment has declined as the cellular networks

have matured and Telkom has privatised to a large extent. This has not

affected employees with high skills as much as those with intermediate

skills.

The manufacturing sector is becoming more export oriented, especially the

motor vehicle industry, and demand for highly skilled engineers and

managers is picking up.


6.3. Intermediate skills sectors (NQF 4 – 5)

These are skills found in people with at matric, certificate and diploma

level. Most technical skills fall in this category, as well as supervisory and

middle management positions. Teachers, nurses and police officers, as

well as the bulk of government administrative positions have these skills.

In a survey of companies as to which category of employee was the most

difficult to find, the following was noted.

Table 8 – Intermediate skills needs

Technicians 88%

Craftsmen 57%

Managers 56%

Service & sales 41%

Professionals 35%

Operators 35%

Agriculture 7%

Unskilled 1%

Clerks 0%

Chart 3 – Most difficult to find employees

88%

1%

57%

56%

0%

41%

35%

35%7% Technicians

Unskilled

Craftsmen

Managers

Clerks

Service & sales

Professionals

Operators

Agriculture


At artisan level, a shortage of skilled fitters, plumbers, welders, turners and

electricians exists. This shortage has been experienced for many years,

with SASOL suggesting an overall shortage of 20 000 artisans in 2003.

Mining skills5 needed are:

• Technical and craftsmen as millwrights, boilermakers and electricians

• Rock engineering

• Underground hard rock

• Surface mining

• Health and safety

• Team building and problem solving

CHIETA identified the following skills needs at the intermediate level:

• Technical and operational experience, especially amongst females

• Sheet metal workers and millwrights

• Analyser technicians

• Pipe fabricators

• Rotating equipment artisans

6.4. Low skills sectors (NQF 1 – 3)

As the economy shifts to a more services oriented society, away from the

traditional commodity economy, demand will continually decline.

The structural decline faced by the mining industry has led to the shedding

of more than 230 000 jobs in the past decade. This decline is largely

attributable to the scaling down of the highly labour intensive deep level

gold mining industry. This industry is faced with declining reserves and

also a low exchange that makes export marginally profitable. The

exchange rate will have to return to levels last seen in 2002 before real

profits are made.

Sectors that are likely to shed jobs have been identified as wholesale/retail

and energy, due to increased capital investment, mechanisation and


outsourcing. The manufacturing sector has also slowly been shedding

jobs.

Demands for these skills are more likely to come from government than

the private sector. The Expanded Public Works Programme (EWPW) is an

example of this type of initiative.


7. SUPPLY OF SKILLS

It is important to examine what skills are likely to become available to the

labour market over the next few years, in order to see if a better match is

made between supply and demand than is currently experienced.

7.1. Higher education trends

Research7 conducted into student’s behaviour with regard to further

education and employment has interesting implications for higher

education (HE) and skills development strategies.

The key findings of this study conducted in 2002 were:

• 73% of learners intend to enter HE within the next 3 years.

• No significant difference exists amongst the race groups in wishing to

enter HE, apart from Coloureds, who show a significantly lower

percentage.

• The main reason given was to enhance employability, with nearly 90%

of respondents viewing HE as a gateway to employment.

• External funding of HE is more important for African Blacks than other

race groups.

• Family and friends exert greater influence on African Blacks than other

race groups.

• Learners who have parents with HE are three time more likely to aspire

to HE.

• A learner with a sibling is two time more likely to aspire to HE. This is

the most significant predictor in determining whether a learner wishes to

study further.

Learner choice of institutions is directly related to their socio-economic

status (SES) and race group. Overall, 55% of learners wish to go to a

technikon and 35% to a university. 10% are undecided.


Historically advantaged technikons and universities are the most popular

choice for high SES learners of both race groups. Black Africans of the

lower SES also chose historically disadvantaged universities.

The popularity of technikons is ascribed to their ease of access as no

matriculation endorsement is needed and because technikons focus on

industry links and employability.

Most learners wish to attend public institutions, but a small percentage

(9,6%) chose a private institution, mainly because they felt it would

prepare them better for the labour market.

Most learners expressed a preference for contact learning (86%) over

distance learning. Of those choosing distance learning, 25% wanted to

work while studying further.

Learner choice of institution was as follows:

Table 9 – Choice of HE institution

# HE institution % choice

1 Technikon Pretoria 16,6%

2 Technikon Witwatersrand 4,9%

3 University of Pretoria 4,4%

4 Technikon Vaal Triangle 4,2%

5 Other 3,9%

6 University of Natal 3,6%

7 Technikon Natal 3,4%

8 University of Cape Town 3,1%

9 University of the Witwatersrand 2,9%

10 Port Elizabeth Technikon 2,9%


11 Cape Technikon 2,7%

12 University of South Africa 2,3%

13 Medical University of SA 2,3%

14 Mangosuthu Technikon 2,2%

15 Technikon Free State 2,0%

16 University of Durban-Westville 1,9%

17 Technikon SA 1,9%

18 Technikon Northern Gauteng 1,9%

19 ML Sultan Technikon 1,7%

20 University of the Western Cape 1,4%

21 Border Technikon 1,3%

22 Eastern Cape Technikon 1,3%

23 Rand Afrikaans University 1,2%

24 University of Venda 1,2%

25 Vista University 1,2%

26 University of Fort Hare 1,2%

27 University of Stellenbosch 1,1%

28 Peninsula Technikon 1,1%

29 University of Port Elizabeth 1,1%

30 University of the Free State 1,1%

31 Potchefstroom University 1,0%

32 University of the North 0,9%

33 Transkei University 0,6%

34 University of Zululand 0,6%

35 Technikon North West 0,5%

36 Rhodes University 0,4%


37 University of the North West 0,4%

38 Don’t know 13,3%

A further analysis of this preference by race indicates the following five

preferences in order:

Table 10 – HE institution preference by race

# Black African Coloured Asian/Indian White

1 Technikon PTA Cape Technikon Univ. Natal Other

2 Technikon Wits UWC Technikon Nat UP

3 Technikon VT Stellenbosch UCT Stellenbosch

4 UP Other UNISA UCT

5 Univ. Natal UCT Wits Technikon PTA

Factors affecting the choice of institution for HE study are as follows:

Table 11 – Choice of institution

# Factor

1 Reputation of institution

2 Reputation of faculty or department

3 Far from home, proving accommodation

4 Sporting facilities

5 Lower fees

6 Recommended by friends

7 Provides distance education

8 Near home, allowing residence at home

9 Alma mater of relatives

10 Award of scholarship to study at the institution


Of interest is that Black Africans and Coloureds express a greater wish to

study away from home than do Whites and the Asian/Indian race groups.

Paradoxically, Black Africans and Coloureds express a greater interest in

distance learning as well.

The province in which the learner lives is the most significant predictor of

which HE institution will be chosen.

7.2. Field of study

This follows on from the above research and gives a clear indication of

where learners wish to place themselves in the labour market. An overview

of situation is that 40% choose science, engineering and technology

(SET); 26% choose business or commerce and 19% choose humanities.

Table 12 – Popularity of field of study

# HE institution % choice

1 Business, commerce & management studies 25,6%

2 Manufacturing, engineering & technology 15,6%

3 Health sciences & social services 14,1%

4 Physical, mathematical, computer & life sciences 10,2%

5 Human & social studies 5,9%

6 Services 5,5%

7 Agriculture & nature conservation 5,4%

8 Law, military science & security 5,4%

9 Culture &arts 4,0%

10 Communication studies & language 2,1%

11 Education, training & development 1,4%

12 Physical planning & construction 1,2%


13 Don’t know 3,6%

• 47% of learners intend studying towards a degree, 31% towards a

diploma and 9% towards a certificate.

• Learners with better academic performance tend to choose the SET

subjects.

• A large majority (79%) of those who wish to study in the SET fields are

taking mathematics in the standard grade. This explains the high drop-

out rate in those programmes.

7.3. Supply of high skills (NQF 6 – 8)

The Department of Education8 has identified mathematics, science and

technology as key drivers in the development of scarce skills. A special

focus on Black, especially female learners can be expected.

Engineering graduates from universities and technikons have declined

markedly over the past 10 years, from around 1 600 per year to 1 100 in

2001. Most of these were White graduates, and this is probably due to

structural changes in engineering related sectors. White graduates

declined from 1 150 per year in 1991 to 800 in 2000.

There is also a surplus of biotechnology engineers and technicians,

probably because this is a new industry that has not yet begun to

experience growth.

In general, the supply of highly skilled people should match demand over

the next five years if the education system can deliver the skills to those

who demand it. There is certainly no shortage of learners wishing to be

trained in these skills.


7.4. Supply of intermediate skills (NQF 4- 5)

FET colleges and public institutions have become increasingly under

pressure to improve their funding ratios as government funding has

declined. This has resulted in a more market oriented approach to

developing skills, and these training providers are competing with private

sector training providers for corporate and individual learners.

Private training institutions are also offering courses that meet the

aspirations of those learners seeking vocational training to make them

more employable.

Approximately 70% of technikon graduates acquire these intermediate

skills, as do 45% of FET graduates. With regard to learnerships,

approximately 47% of learners will achieve or have achieved this level of

skills.

Of concern is the gradual decline in enrolment and graduation of national

diploma, higher diploma and BTech graduates since the mid 1990s. This

decline is mostly amongst Whites, while African Blacks have been

gradually increasing their enrolment and graduation. A decline to around

25% of the 1991 number of White graduates has occurred up to 2000.

It is also noted that technikons have increased their output of business

graduates at the expense of technical and science graduates.

A marked decline in apprentices has also occurred during the 1980s and

1990s. In 1986 there were nearly 30 000 apprentices in training, and this

declined to 16 500 by 1998. A similar decline in private training and

training schemes also occurred over the same period. A total of 288 000

were in training in 1986 and 61 000 in 1998.

With regard to the value or effectiveness of FETs, it was found in research

conducted in 2001 that 81% of grade 12 learners entered FETs exited with


an N3 qualification. This is an equivalent level qualification undertaken by

learners to improve their employability, but without improving their overall

skill levels.

This did not provide the help they needed, as the survey found that only

33% of FET graduates became employed.

7.5. Supply of low skills (NQF 1 - 3)

There are currently in excess of 7 million people who fall into this category.

Supply is not a problem, meeting the demand for these skills are a very

real problem.


8. DIVERSIFICATION OPPORTUNITIES FOR SOLIDARITY

Many opportunities for Solidarity arise out of the above research. The salient

points to note, in no particular order are:

• The main skills shortage is at the intermediate level.

• The most acute problem in terms of unemployment trends is in the labour

intensive industries such as mining, agriculture and textiles. Some sections

of manufacturing engaged in exports are also under pressure.

• Growth in employment will be in the financial services sector, construction

and manufacturing.

• The high number of learners studying mathematics at standard grade and

not the higher grade.

• The inability of FETs to deliver skilled learners back into the workforce.

• SETA learnerships are not always aligned with current industry needs.

• The relatively high numbers of learners who intend obtaining higher

education qualifications, mainly in manufacturing, engineering and

technology fields as well as business and commerce fields.

8.1. Solidarity’s position in the training landscape

Solidarity’s position in the training landscape

Solidarity SETA Training provider

Employer

Member/ Employee/

learner


Solidarity is in a position to play a unique role in bridging the gap in skills

and employment for its members. It has a large base of members,

clustered in specific sectors. It shares similar aspirations with regard to its

members’ skills and employability as do employers, training providers and

SETAs. Each of the stakeholders in the above diagram has certain needs.

Solidarity is in a position to assist each stakeholder in this, while at the

same time securing and growing its own membership base.

8.2. Strategic approach

Solidarity has three dimensions of opportunities for diversification. These

are members, skills and industry sectors

Members

Solidarity should reach out to grade school learners by helping them to

identify appropriate, relevant skills and knowledge based training when

they graduate from school. It is apparent that many learners have the

desire to learn technical skills, and this desire could be tapped into by

Solidarity.

The training would be aligned to employer needs in the region and area

that the learners live in, and the training courses would be provided by

local FETs, technikons and private colleges. The training could be a formal

learnership, developed in conjunction with a SETA, or a practical, vocation

based type of training.

This has a twofold benefit for Solidarity. It exposes the learners to

Solidarity as a movement, and would make it easier to sign up learners as

members once they become employed.

A further opportunity arises when one considers the large number of

retrenched members who are no longer active contributors because of

their financial predicament. A skills audit should be conducted to identify


their current skills, and a training plan developed to up-skill retrenched ex-

members. They could then at least look for employment with their new

skills in the same or different industries.

Skills

Solidarity should obtain the Work Skills Plans of each major employer their

members belong to in order to identify employer training needs, and

discuss their long term skills needs. From this a consolidated set of sector

skills needs can be determined. Employers in other sectors/industries

should also be canvassed in order to understand their skills needs.

Much of the current skills based training is vocational in its approach. The

demand for employees with knowledge of mathematics and science at a

higher grade will continue to grow. Currently, too few learners are

graduating at the higher grade, and this will increase the skills and

employment gap.

Solidarity should develop programmes in conjunction with training

providers that offer learners, members and ex-members the opportunity to

upgrade their mathematics and science skills. Other type of programmes

should also be developed that focus on skills that knowledge workers need

to acquire.

Solidarity should also identify programmes that provide skills that are

relevant in the services sector, especially in that of financial services. This

provides the opportunity for members at risk of retrenchment in some

sectors to develop skills that could be transferred to a new sector. These

skills are outlined in more detail in the body of this report.

Other type of skills training could be in the area of entrepreneurship, so

that retrenched members are at least able to become self-employed, using

the skills that they have developed in the SMME business environment.


Industry sectors

The changing nature of work and employment, from commodity based

industries to service based industries has a long term effect on the

demand for skills.

Solidarity should identify the core skills needed by employees in other

sectors that show growth, and, with training providers, develop training

courses that up-skill existing members, as well provide relevant training for

new members and the unemployed.

This will allow Solidarity to make inroads into new industry sectors.

8.3. Partnerships and alliances

Solidarity should form partnerships with private and public training

institutions in each province to offer learnerships and specialised training.

FETs in particular would benefit from this partnership.

Solidarity’s base in the northern part of the country, combined with the

strong public training sector in Gauteng, make it relatively easy to manage

a significant element of the partnership.

Solidarity is in a position to bring many thousands of members through

their doors, and should be able to use this as leverage to demand cost

effective training.


9. REFERENCES

1. Labour Force Survey, Statistics South Africa, September 2004.

2. Standard Bank SA, Labour bulletin, March 2005.

3. “Education, employment and skills in South Africa”, HSRC HRD Review,

2003.

4. Department of Labour Employment Strategy Framework, 2001

5. Mining Qualifications Authority Sector Skills Plan, 2001 – 2005.

6. CHIETA draft sector skills plan: July 2004 – June 2008

7. Cosser M, du Toit J, “From school to higher education: factors affecting the

choices of Grade 12 learners” HSRC, 2002

8. Department of Education, “Skills required for a developmental state”, 2004

OTHER READINGS

Bhorat H, “The Labour Market in Post-Apartheid South Africa”, 2003

Cosser M, “The shape of skills to come: Higher education and the supply-

demand complex in South Africa” HSRC, 2004.

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