New challenges, old constraints
Boshard speaks with good authority on a war that has seen search firms assemble formidable hiring machines to help corporates find the people they need in a fast changing global market.
In the past year in particular, the South African economy has been roaring ahead at an unprecedented annual growth rate, not seen in three decades, and demand for skills is simultaneously running high. Apart from the growing number of South African companies looking to expand into Africa, more multinationals seeking revenue and profit growth opportunities are using South Africa as a gateway into the rest of the continent, according to latest data by Boshard’s Heidrick and Struggles.
There can be no doubt that businesses operating in South Africa face an ever-widening talent gap, particularly at mid and senior executive levels.
But there is more to the story that many companies may have overlooked.
Demographic and historical events have conspired to create a major obstacle for companies looking to capitalise on the South African and African opportunity: with an apartheid legacy of severe inequality in the path to work and learning in South Africa, and a massive exodus of local executive talent abroad, there simply aren’t enough skills in the country to meet this need. South Africa itself is bleeding skilled personnel at an accelerating rate and its population of management talent-age is declining rapidly.
The stakes are high. The battle for the future is under way, and it’s a battle for talent. To be sure, the old battles for resources are still with us. But they have been supplemented by new ones, not just among countries competing for scarce human resources but among countries fretting about the “balance of brains” as well as the “battle for brain power”.
South Africa Inc is probably the biggest fatality in this war of wits.
That the collapse of the apartheid system in the 1990s sparked a (primarily white) exodus from South Africa has made it bloodier still. According to government statistics, more than 1 million skilled white South Africans have left the country since 1994.
Some of these emigrants are self-styled ‘refugees from democracy’ (privileged whites who rather than contemplate the redistribution of privilege, have decided to leave for distant shores). Others are people with skills that are in high demand elsewhere.
The fact of the matter, however, is that there is no reliable data on the actual extent of emigration from South Africa, with figures reported by the South African data service Stats SA representing a severe undercount of skilled emigration which are estimated to be about only one-third of real emigration.
The research findings of the Human Sciences Research Council shows that, contrary to popular perception, the so-called brain drain in South Africa started long before the inception of the new government in 1994, and the figures suggest that the flow of professionals from the country continues to increase rapidly.
At the same time, the number of highly skilled immigrants into South Africa — a critical source or the replacement of skills lost through the brain drain — is on the decrease.
The trend is worrying. For instance, over the past thirty years, the vast majority of skilled emigrants have been in the most productive age groups — 25 to 45 years — which means that the brain drain largely comprises South Africans who are already trained and established professionals. There has also been a steady increase in the number of professional women leaving South Africa, from about a quarter of all skilled emigrants in the 1970s, to just less than half in the 1990s.
The most critical question in terms of the human resource base in South Africa is
exactly which skills are we losing? The official statistics indicate that the greatest mobility of highly skilled people, both into and out of the South African economy over the past decade or so, was amongst those in education and humanities occupations, followed by engineers and architects, and top executive and managerial personnel. Emigration amongst those in the natural sciences and medical professions is also on the increase, while there has been a dramatic decline in the number of skilled immigrant occupational fields. Officially, just 3 500 people immigrated to South Africa in the first ten months of 2005.
What makes skilled South Africans emigrate? More recently, research shows that the highly skilled are leaving because of crime, perceptions of a high cost of living and levels of taxation, and the perceived decline in the standard of public services, notably health and education delivery. At the same time, professionals in South Africa are eager to take advantage of the attractive salary packages and career opportunities in relatively advanced countries like the UK and Australia.
In a way, these motivating factors are common sense. But this is only half the story. What they do not take account of is the root cause of the shortage of black talent in the country and the increasingly pervasive influence of globalisation on skills migration around the world.
Intuitively, it is tempting to use the brain drain as a proxy for the range of deleterious effects on the country’s economy — the adverse effect on economic growth and the country’s capacity to develop as a knowledge society and therefore compete effectively in a global economy.
While it has become commonplace in South Africa to parry criticism of the apartheid legacy of racial inequality with white paranoia of ‘reverse racism’ arising from the implementation of the government’s employment equity and Black Economic Empowerment policies as the reason for the skills problem, such reasoning tends to infer that the cause of the country’s talent bottleneck is a shortage of white talent.
While this is true to some extent, none of the talent challenges, it must be borne in mind, emerged in a vacuum, out of the blue, as it were. In fact, observational evidence of the current skills bottleneck shows striking structural similarities to the historical context that gave rise to the problem.
Oddly, it is the advent of institutionalised apartheid in the 1950s — the cause of the problem in the first place — that led to half-hearted efforts by the government to address the country’s skills shortage.
In previous decades, prohibitive racial policies prevented blacks from entering semi-skilled and skilled occupations. While the period of low growth during the 1930s and ‘40s suited the racial bias of the government of the day, by the mid-1960s the South African economy entered a growth phase, and along with this, a growing demand for white-collar skills.
So spectacular was the growth phase between 1963 and 1975 that GDP lurched from 4,6 percent to 7,7 percent in 1963, reaching as high as 8,5 percent in 1964.
The effect of these economic changes on the skills composition of the workforce was quite dramatic. Previous attempts to sustain economies of scale (rate of supply and demand) of a white business and consumer class within a stable, insulated parallel economy began to implode as tensions arose out of the increasing employment of different races in skilled jobs.
White skills were in short supply, so much so that by the end of the 1960s the shortage of white-collar labour led organised business to call for educational reforms that would train African labour, particularly at the secondary and technical levels.
The conditions for sustained economic growth which began in the 1960s placed a strain on the supply of white routine white-collar workers.
During the 1960s and 1970s, the demand for routine white-collar labour grew at an annual rate of 3,2 percent and 4,4 percent respectively. Over the first decade, from 1960 to 1970, the annual rate of supply of appropriately qualified white labour was well in excess of demand at 5,3 percent. However, during the 1970s, the rate of growth in the supply of white labour declined dramatically to only 2,8 percent per annum and then fell even further to a mere 0,2 percent per annum during the first half of the 1980s. Over the same period the rate of supply of appropriately qualified black labour was not only higher than that of white labour, but was sustained throughout the 1970s and ‘80s.
By the 1970s there had been a marked shift in the racial composition of the supply of routine white-collar labour, due partly to reforms in the state education policy. Under pressure to alleviate the shortage of labour, the government responded by rethinking its policy of limiting the expansion of black secondary schools. During the 1950s and ‘60s the government sought to limit the size of the urban black population and to restrict blacks to menial manual jobs by providing no new secondary schools.
This policy was revoked in 1972 and the budget for black education outside segregated areas in which they resided was substantially increased.
The impact of these reforms on the educational profile of the black population was quite dramatic. Whereas in 1960 only 2 percent of the population had completed Standard 8, by 1985 this proportion had increased to about 10 percent.
This growth might appear inconsistent with the policies and practices of the apartheid state, but, whatever its rhetoric, the apartheid state had no alternative but to reproduce a growing urban black workforce. Encouraged by a new concern among organised manufacturers and commercial employers about the shortage of routine white-collar and top semi-skilled labour, Afrikaner
employers within the ruling National Party government joined their English-speaking counterparts in demanding more commercial and technical training for blacks at secondary school level.
So why the current skills shortage in South Africa? More precisely, why are black professionals and executives wanting in present-day South Africa? The answer lies partly in the limitations to far-reaching change of the apartheid government’s post-1960s reform agenda, according to the research findings of Owen Crankshaw in his 1997 book, Race, Class and the Changing Division of Labour under apartheid. Rather than deracialise skilled categories of employment, which would have been contrary to the apartheid policy of racial segregation and job reservation for whites, Crankshaw found that the government and manufacturers struck a clever bargain, little known in most historical accounts of the apartheid period, to cheapen labour costs. Entirely compatible with white supremacy, the upward mobility of blacks was usually accompanied by the mechanisation of skilled work which fragmented skilled trades into numerous semi-skilled jobs performed by semi-skilled black labour. Blacks were largely restricted to fragmented semi-skilled jobs which had been split off from skilled trades filled mostly by whites.
Simultaneously, white workers who had previously occupied these positions were promoted ahead of blacks into skilled, managerial and executive positions.
In this way, the demand for more cheap skills was met without removing the colour bar on occupational mobility.
A consequence of this bargain between business, government and white labour is that black advancement into relatively skilled trades was blocked until the 1980s. By 1979, only 2 percent of all artisans for instance were black. Despite further attempts by the government to reform the race-based system of employment during the 1980s, black employment in skilled positions in the construction, mining and manufacturing sectors had still reached only 20 percent of this occupational category. Between 1965 and 1990, the proportion of routine white-collar jobs filled by blacks doubled from 15 to 31 percent.
So for a while at least, the apartheid government was able to resolve the contradiction between apartheid policy design and manufacturing capital’s expanding markets and growing need for large numbers of skilled black workers.
In quite fundamental ways, this apartheid legacy continues, despite the deracialisation of the country’s policies and institutions beyond apartheid. The inadequacy of the partial reforms of the apartheid government was apparent by the time the country held its first democratic elections in 1994. A year later, the new government, led by the African National Congress, had set an ambitious agenda to liberalise the economy, empower a black business class and grow the economy by a not very immodest figure. A Black Economic Policy framework quickly emerged with set targets and timeframes, old regulatory policies were overhauled and replaced with new ones, and there were swift moves to create an enabling environment for domestic and foreign direct investment.
By 2000, the country’s economic fortunes were changing, somewhat ineluctably, for the better, driven by a newly emerging black middle class and buoyant demand for goods and services.
A 6 percent growth target was set and it seemed the country was well on its way. The fly in the ointment, however, was the skills needed to drive the economy to the growth target that had been set.
In a rather curious turn of events, the government’s push to remedy the apartheid legacy of racial inequality by enforcing a policy of employment equity and black economic empowerment in the workplace led to an exodus of white skills out of the country and a dearth of black managerial and executive talent to meet industry demand. In particular, structural economic shifts within the economy towards a knowledge society capable of competing in a global environment brought the added variable of a shortage of technical and entrepreneurial ICT skills, with a stupendous 200 to 300 ICT-skilled resources leaving the country each month. This is caused by the rapid growth in demand for ICT skills worldwide and little opportunity (jobs, remuneration, and innovation) in South Africa.
The sector is a leading indicator of what is to come in the South African economy and society. Today, South Africa’s economic base is predominantly mining and manufacturing. But to drive its economy in the decades ahead and continue to improve its standard of living, South Africa will rely increasingly on knowledge-intensive industries like high technology, a sector expanding rapidly in the global economy and pivotal to the realisation of efficiencies within industries.
The South African government clearly recognises the centrality of the sector to the country’s growth and has put this industry at the forefront of its current industrial policy to build a ‘smart economy’.
But it is also difficult to find a sufficient supply of skilled ICT workers to meet the rising demand.
Historically, the education infrastructure in South Africa has been segregated and unequal, and ICT provision in schools reflects this. Approximately 50 percent of schools have no infrastructure to support ICT use among students. In addition, the current education system has been slow to meet market needs. ICT courses are only available in the universities and technikons, despite attempts by the Department of Education to revise the curricula to include ICT courses at the primary and secondary levels and to create ICT-specific learning centres.
Perhaps more emblematic of the talent problem today is the implications of an increased level of global mobility of skills and resources for tertiary education students.
A study of the emigration potential by analyst Jonathan Crush reveals that not only are an increasing number of graduates considering leaving for other countries, but a greater number of black graduates are open to emigration.
Overall, twice as many students sampled in the survey, compared to a 1998 study, indicated they would consider leaving the country after graduating. Of this sample, there was no real racial difference in the proportion of skilled adults with a very high emigration potential. Among those with a high potential, there were an equal number of blacks and whites.
In part, this demonstrates a shift away from the post-1994 racial profile of emigration trends, where students are responding to adverse economic and social conditions in South Africa.
Moreover, it also demonstrates the greater portability of talent in the world today.
As Crush in his study on Nationalism, Globalisation and the SA Brain Drain convincingly suggests, an increasing level of global mobility is one manifestation of the internationalisation of the professions and professional labour markets.
“In advanced countries, sourcing skills from outside the boundaries of the nation state is an increasingly important method of making up for domestic training and experience shortfalls,” he says. Canada, for example, unapologetically uses South Africa as a global hunting ground for skills it loses to the United States.
Of course, the fact that South Africa had become a fertile global hunting ground for advanced countries to pursue a strategy of ‘replacement recruiting’ — using the human capital from the rest of the world to substitute a country’s emigration of skills — does not help matters.
In essence, the global village offers an open market for employment and career opportunities to the highly skilled and, in recent times, the term ‘brain circulation’ has even been used to capture the increasing flow of professionals around the world. In fact, the ability of countries like the US to attract and retain large numbers of highly skilled migrants in the globalised market has contributed significantly to these countries’ advancement.
The biggest challenges to the South African government are to find ways of keeping skilled people at home — although this requires a long term approach to the improvement of security and improved service delivery — and to develop a policy which attracts the highly skilled from other parts of the world to our shores.
-Business in Africa Magazine
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