Addressing skills shortage tipping point must be major focus for 2021

 By James Formby

       * On average between 21,000 and 23,000 South Africans leave each year

       * Skills loss evident in medical, construction industries

       * Economic and political stability needed to stem tide

A skills shortage is one of South Africa’s biggest economic risk factors and could hamper the country’s economic recovery plan and infrastructure ambitions says RMB CEO James Formby.

"Skills are often judged by the matric pass rate or the number of university graduates.

While improving our education system is important, most of our skills are gained through learning on the job and by observing experienced role models.

“People with more than ten years of experience, particularly in a specialist field become very difficult to replace. As experience leaves, there are fewer role models to train those that are keen to learn,” he said.

Any evidence-based discussion about South African emigration is made difficult by the fact that there is no official bureau that collects emigration data. To ascertain a trend, RMB refers to the UN’s Total International Migrant Stock dataset from 2019 according to which the number of South African-born persons residing outside of South Africa increased from 330,000 in 1990 to 900,000 in 2017 – an average of 21,000 South Africans per year.

This is slightly less that the assumptions made by StatsSA in its 2019 mid-year population estimates, which suggests an annual average outflow of roughly 23,000 people per year between 2016 and 2021.  Anecdotal evidence suggests that a growing number of individuals leaving are professionals but due to a lack of official data, the exact proportion cannot be verified.

Formby noted that other countries are actively attracting South Africans with proven work experience. The UK and Australia are the two preferred destinations for South African emigrants while Canada and New Zealand are proving increasingly popular.

“We have lost many skilled South Africans to emigration in the last few years. While Covid may have slowed this temporarily, it won’t take much for the constant stream to turn into a torrent. The sense we get is that a lot more people will take the leap if there are no signs of turnaround policies.”

He added that the next couple of years could prove the real tipping point for South Africa where skilled people leaving simply cannot be replaced - even by upping training or making it easier for foreign workers to come to South Africa. Granted, migrants comprised 7.2% of SA’s population in 2019 according to the UN, more than 3.5 times the number recorded in 1990. There is no definitive evidence of relative skills levels, but the sense is that we have attracted those with less skills while losing those with more.

While often mooted, government has still yet to take formal steps to introduce skills visas.

“We must be open to bringing in skills from elsewhere. Those skills create jobs by transferring knowledge and enabling businesses to grow around them. Welcoming talent to a country is simply fundamental to creating prosperity.”

Much has been written about South Africa’s need to attract and retain economic capital – to fund the fiscal deficit and restart growth.

“But skilled human capital is equally important and are attracted by the very same factors. Just as organisations think carefully about their employee value propositions, it is vital that South Africa considers its skills value proposition in offering greater economic and policy stability.

“Skilled people need to have confidence in the future, they need the freedom to invest their savings both inside and outside South Africa and they are attracted by the opportunity to learn from others,” Formby said.

He added that while the banking industry was not yet severely affected, skills loss was particularly apparent in the medical industry and the construction industries, just as more skills are needed to develop government’s long pipeline of infrastructure projects. A survey conducted by the South African Medical Association (SAMA) found that 38% of respondents (from public and private healthcare) said they would consider emigrating if the NHI was fully implemented while 6% would emigrate for other reasons. In 2019, the South African Institution of Civil Engineering (SAICE) reported that in the past three years it had lost 1.73% of its members, aged 30-60, to emigration

“There is enough capital in South Africa for these projects but we are thin on skills. The real trick in pulling off our infrastructure led growth is accessing and enabling specialist skills. “We may well have to tap those in retirement, the private sector and those who have given up on the construction sector and moved to other industries. Embracing non-conventional skillsets that will enable the fourth industrial revolution is as important,” Formby said.

 Formby is RMB CEO


RMB is a leading African Corporate and Investment Bank.