THE PAY MIX: W Cape Must Prevent Job Losses
Recent Western Cape Business News
The Western Cape will need to pursue educational excellence in all of its academic institutions at all levels in order to prevent rising unemployment in the future, according to remuneration specialist, Martin Westcott.
Addressing human resource practitioners at a Work Dynamics breakfast seminar in Cape Town recently on “Determining your pay mix in a changing economy”, Westcott said that although there were shortages of skilled workers such as engineers, lawyers, financial and IT professionals across the country, there was also a global move away from the lower skilled labour categories, including in the Western Cape.
Westcott is chief executive officer of PE Corporate Services, an associate company of Work Dynamics.
“The unskilled labour force is progressively being replaced by mechanisation and the demand has increased proportionately for skilled and specialised staff,” he said.
The Western Cape not only faces a diminishing pool of jobs for unskilled workers, but must contend with a continuing “brain drain” that has seen scores of professionals and workers with scarce skills emigrating from South Africa. What is seen as a lack of opportunities due to the economic slowdown and BEE is contributing to the exodus of skills.
Another contributing factor is remuneration. Salaries in the Western Cape are on average four to six per cent lower than equivalent positions in Gauteng.
However, this can create opportunities for companies based in the Western Cape because they can attract top skills for less money than those based in Gauteng.
“The cost of labour is a matter of supply and demand,” says Westcott. “People are attracted to the Western Cape because of the lifestyle options it offers. This creates a better supply of labour in most industries and at most skill levels, which also means lower labour costs than up-country.”
However, lifestyle does little to entice entrepreneurs, and valuable skills are being exported throughout the rest of the developing world. “A lot of our skilled workforce is now living in places like Kuwait and Dubai,” says Francois Wilbers, MD of Work Dynamics.
“Many of our clients are tackling the issue of retaining skills, particularly at an executive level,” says Wilbers. Other factors affecting skills retention are the issues of crime, corruption and job creation – serious obstacles to keeping skilled workers in South Africa.
“South African businesses need to identify certain incentives that will keep these skills here,” says Westcott. “Pay systems need to be based on global philosophies to reflect the changing nature of business, but they must also be fine tuned to fit in with the local norms.”
However, higher salaries alone will not guarantee an influx of skilled labour. Businesses throughout the world are also making use of the skills and lateral thinking of entrepreneurs. “In today’s knowledge economies, entrepreneurs don’t necessarily have to be business owners. Companies are employing diverse people with diverse skills in order to maximise on creativity, and identifying the next ‘big idea’,” says Westcott.
In Australia, for example, some state governments hold industry-specific competitions geared towards identifying budding entrepreneurs in order to provide financial support for the most promising projects, thereby investing in the economy. He uses this example to highlight a similar need in South African government. “Government needs to identify, nurture and support entrepreneurs in order to help to create employment outside of the public sector.”
According to Westcott, employment in the private sector is has fallen by 2,9% over the past five years, while in the public sector it has risen by 13,6%.
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