Shortage of skills in critical sectors in South Africa

South Africa is facing a continued shortage of critical skills, says listed workforce solutions company, Adcorp – particularly in nursing and information technology fields.

The group reported its financial results for the full year ended February 2022, noting a strained operating environment in South Africa, exacerbated by the Covid-19 pandemic, load shedding, and social unrest.

Revenue for the year was down 1.7% to R11.5 billion (2021: R11.7 billion), though gross profit from continuing operations increased by 7.0% to R1.2 billion.

Total headline earnings per share increased to 99.4 cents per share (2021: 34.2 cents per share), and the company declared a dividend of 47.0 cents per share (2021: nil).

Adcorp offers recruitment and staffing services across various sectors in South Africa and Australia. Its operations are split into 15 different divisions to handle each sector. In addition, it offers industrial and professional staffing solutions, as well as training.

“At the start of FY2022, the business environment remained constrained as a result of client pressure to cut costs and rationalise employees due to the continuation of the Covid-19 pandemic,” it said.

“Low economic growth and ongoing electricity supply and infrastructure challenges in South Africa negatively affected economic growth and, consequently, demand for contingent labour. Demand was further negatively impacted by the July unrest in KwaZulu-Natal and parts of Gauteng.”

These problems impacted the group’s contingent workforce operations as well as its functional outsourcing division, though it anticipates that these will recover as it pivots its products to be more in line with the changing environment.

As an example, the group’s engineering, construction and energy brand, Cynergy, has been repositioned to serve the emerging renewable energy sector – but the full effect of this move will only be seen in FY2023, it said.

Its professional services have also been hard-hit, Adcorp said, with revenue declining as the economic recovery in South Africa stalled, and demand for its services fell. Many client projects remained on hold, it said, resulting in lower contingent and contract resource needs.

Notably, Adcorp said that skills shortages in critical sectors continued, particularly among nursing and IT resources, affecting its medical brand, Charisma, and IT brand, Paracon.

“Nursing shortages negatively affected the Charisma business, although focusing on nurse retention and a pivot into Covid-19 contract and vaccine services helped to mitigate the effect,” it said.

Looking ahead, the group said that it expects much of the same for FY2023, though with at least some recovery.

“Adcorp expects the slow recovery in South Africa to persist through FY2023 and remains concerned by rising inflation, high unemployment and ongoing infrastructure and service delivery failures. We have seen early signs of some recovery in permanent and contingent demand,” it said.

Skills shortage

Adcorp’s reporting ties into findings from several recruitment firms and the government itself.

Data from specialised expatriation company Xpatweb showed that engineering skills are some of the most sought-after skills in South Africa. Employers are looking for highly qualified engineers with many years of experience.

Also included are technologists and technicians in specific engineering fields. However, these professions will be required to register as professionals in their field with the Engineering Council of South Africa (ECSA), which is the statutory professional body regulating this industry, it said.

According to Altron, emerging technologies such as artificial intelligence and automation are rapidly changing the business landscape, and cyber security and cloud migration are more urgent than ever – yet the pool of professionals in this area is limited and employers are struggling to fill the IT skills gap, with demand exceeding supply.

The group noted that the skills that are the most sought after among IT professionals in South Africa include anything cloud-related, data engineers, DevOps engineers and Java developers.

On the nursing front, Adcorp’s data reflects the critical shortage of health professionals recently raised by health minister Joe Phaahla.

The minister noted that the country has a doctor-to-patient ratio of 1 to 3,198 (0.32 to 1,000), which is critically low. Medical group, Life Healthcare, meanwhile, said that the country needs as many 26,000 additional nurses to meet growing demand.