Many South African technology and telecommunications companies are firing workers, and this is set to continue in the coming year.
This is the view of labour consultant Tony Healy, who told Business Day TV that job losses are a consequence of many years of low economic growth and increased digitization.
On 13 January, Massmart announced it was planning to shut down its 23 Dion Wired stores which will affect over 1,000 employees.
Only days later Telkom said it was planning to cut 3,000 jobs this year because of the tough economy, the move to mobile data, and inefficiencies at the company.
This, however, is only the tip of the iceberg. Many other tech companies have already shut their doors or are cutting staff.
In the last two weeks news broke that ICT service provider ATIO is set to be liquidated and that Yekani Manufacturing’s R1-billion electronics factory in East London may shut its doors.
These job cuts, Healy said, are not surprising when one considers there was very little economic growth over the last few years.
“Without economic growth, one just can’t create the jobs that we need to stave off job cuts,” he said.
Dennis Dykes, chief economist at Nedbank, said what we are seeing is capitulation – with companies realising the much-needed economic growth will not come.
“Companies have done the cost cutting and trimmed their budgets to keep expenses under control in the hope that we will now start to see an uplift in the economy,” he said.
“They are now basically thinking it is not going to happen and are therefore turning to more serious interventions, including job cuts, to survive.”
Bad outlook for 2020
Bad news for employees is that South Africa’s dismal economy growth means companies do not have the funds to train employees for other positions.
Healy said while the government is trying to intervene to prevent job losses, there is not much companies can do as they have to balance their books.
Further bad news is that South Africa’s projected economic growth of 0.9% in 2020 is not close to what is needed to turn the situation around.
“We need growth levels above 5% before we can begin to realistically say that we are growing fast enough to reverse the job losses we are seeing now,” said Dykes.
Dykes highlighted that unemployment in South Africa is currently at worse levels than what countries experienced during the Great Depression.
He said unemployment is sitting at 29%, but if one includes discouraged workers it is closer to 37%.
“This is horrendous,” he said.
Good news for IT professionals
Good news for IT professionals is that while jobs are lost, there are several areas where there is strong demand.
Healy said jobs which are required in the fourth and fifth industrial revolutions are very different from the skills which are currently required.
He said local companies are not upskilling enough people to fill the kinds of positions which are being created, though.
While people with more traditional skills are losing their jobs, those who have skills suited to the digital world are in demand.