Grant Thornton’s Employment Growth Index (EGI) has reflected a 6% year-on-year growth in employment amongst medium to large privately held businesses in South Africa. The EGI, which is part of Grant Thornton’s International Business Report measures the absolute increases and decreases in employment, as reported by the privately held businesses surveyed.
This signifies a one percentage point drop from last year’s EGI, which reflected 7% growth. In 2006, South Africa’s EGI showed a 3% annual growth in employment.
58% of privately held businesses in South Africa have increased their staff complement over the past 12 months. This is 4 percentage points down from 2007. The global average for employee growth is 54%.
9% of respondents reported a decrease in employment. Globally, 13% of respondents reduced their staff complement.
A sector analysis revealed that the construction sector’s employment increased 8%, lower than the previous year’s 13% growth. The manufacturing sector reported 4% growth compared to the previous year’s 5%. South Africa’s services and retail sector reported employment growth of 9% and 5% respectively. In 2007, the services sector reported growth of 8% and the retail sector 4%.
Lee-Anne Bac, Director of Grant Thornton Strategic Solutions said, “Despite increased inflation, the impact of high crime levels and the shortage of skilled employees, South Africa’s employment growth index has only dropped by one percentage point from 2007. Sustained growth in employment is good news, as privately held businesses rely on their employees to remain competitive and profitable during tough economic conditions”.
Global employment growth
Internationally, the EGI in privately held business reflects employment growth of 4%, an improvement from 2007, when global employment grew by only 3%. With double digit growth, Vietnam (14%), India (12%), Mainland China (12%), and Armenia (11%) top the employment growth table. Thailand (-4%), Italy (0%), France, Ireland and New Zealand (1%) are at the bottom. Regionally, East Asia (8%) and Latin America (7%) showed the highest increases, whilst the European Union and NAFTA (2%), increased employment the least.
Bac adds, “Our IBR research has found that business optimism in medium to large privately held businesses in South Africa is waning slightly. We also know that the lack of a skilled workforce is the biggest constraint to business growth in this sector. Linking these findings to South Africa’s slight reduction in employment growth this year, we can deduce that the lack of a skilled workforce as well as a slight reduction in business optimism may well be impacting on job creation”.
Lee-Anne Bac, Director: Grant Thornton Strategic Solutions.