One cannot discuss labour and recruitment services in South Africa without touching on the issue of high unemployment that looms large, particularly among the youth. The labour market has become complex globally. It is essential to examine the role of emerging industries, new trends in recruitment methods and recruiters’ contribution to economic activity and growth.
The causes of high unemployment
Several factors contribute to South Africa’s persistent unemployment challenge, with youth unemployment rates often exceeding 50%. Structural issues such as inefficient transport infrastructure and unreliable power supply due to failing state owned entities, contribute to a stagnating economy and as a result limit opportunities, particularly for poor communities who do not have relevant skills demanded by employers – a legacy of the apartheid era economic disparities. Quality education and vocational training programmes exacerbates the problem, leaving many young people ill-equipped to compete in the job market.
Red tape and stringent labour laws imposed on employers also hinder job creation efforts and entrench the unemployment crisis. According to the WOW report on labour and recruitment services, Derek Yu of the University of the Western Cape paints a dire picture of the labour market, saying that 50% of unemployed people had an education level lower than Grade 12. The youth unemployment rate at 44.3% or six million people, masks a higher number as the labour participation rate is only about 60%.
Solutions for Youth Unemployment
Structural reforms aimed at creating a conducive business environment, streamlining regulatory processes, and incentivising investment are critical to stimulating job creation.
Investments in education and vocational training programmes must be prioritised to equip young people with the skills and competencies needed to thrive in the workforce. Collaborations between government, educational institutions and the private sector can facilitate the design of tailored training programmes, apprenticeships, and internships that bridge the skills gap and enhance employability. Every measure counts to improve the current situation of exceptionally high unemployment.
Removing red-tape and supporting small and medium-sized enterprises (SMEs) can unlock new opportunities for youth employment and economic empowerment. Initiatives that provide access to finance, mentorship, and market linkages empower young entrepreneurs to establish and grow their businesses, contributing to job creation and economic resilience. These ideas have been tabled by government, but the implementation has been lacklustre and hampered by corrupt activities.
Evolving methods and channels of recruitment
In the not-too-distant past, recruitment was largely done by recruitment agencies. They continue to play an important role by using online platforms to compete with new entrants. These platforms disrupted the industry through contact searches and link-ups that utilise algorithms to match candidates to roles.
The evolving nature of jobs, including remote working, enabled by online communication and video conferencing, affordable rates, have widened the market reach for recruitment agencies. This has also enabled international recruitment agencies to scout our local markets for talent.
The recruitment industry in South Africa is not very favourable for recruitment agencies. Low GDP growth rates, obstructive rather than assistive government, failures in delivery of public services, and the terrible state of the education systems, all contribute to an uphill battle and need for resilience.
Harnessing the Potential of Emerging Industries
Emerging industries hold significant promise in reshaping South Africa’s labour market and driving sustainable economic growth. Sectors such as renewable energy, information technology, green infrastructure and digital services offer opportunities for job creation, skills development, and economic diversification.
Renewable energy projects, for example, require a skilled workforce for installation, maintenance, and operation, providing employment opportunities in areas such as solar and wind energy. Similarly, the burgeoning digital economy presents avenues for innovation and job creation, with demand for software developers, data analysts, and cybersecurity experts increasing.
Organisations can adopt evidence-based hiring practices, utilise data-driven assessments, and implement structured interview techniques. By relying on objective criteria and standardised evaluation methods, recruiters can minimise subjective biases and improve the accuracy of candidate selection.
Conclusion
In confronting the challenge of youth unemployment in South Africa, concerted efforts from all stakeholders are needed to create an inclusive and thriving labour market. Through targeted policy interventions, investments in education, skills development, and support for emerging industries, South Africa can unlock its full potential and provide meaningful opportunities for its youth as it navigates the complexities of the labour market more effectively, paving the way for a brighter future for generations to come.
Illegal mining has grown exponentially in recent years in South Africa, as detailed in WOW’s report on the Manufacture of Explosives and pyrotechnics in South Africa . The inference is that “conditions” for the exercise of illegal mining have improved, and that the environment has become conducive to this activity. This prompted government to implement various measures to curb the increase, with limited results.
Illegal mining is estimated to cost the country’s economy about R72bn per annum, according to ResearchGate. In 1994, artisanal mining was recognised as a means to alleviate poverty, but today such activities are sidelined. As far back as 2017, recommendations were offered by the likes of Pontsho Ledwaba of Witwatersrand University’s Centre of Sustainability in Mining and Industry, who suggested in his presentation Making Illegal Mining – Legal that government should amend and relax laws for small-scale miners in a bid to combat illegal mining.
Illegal Mining: A widespread problem
Illegal mining in the broad sense extends far beyond South Africa as illustrated with a few examples of other countries.
- Research by Kai Wan Yuen 2024 found illegal sand mining in southwestern Vietnam’s Mekong Delta of about 0.35 million cubic meters per annum.
- Between August 2022 and July 2023, an area of 9,001 square kilometres was deforested in Brazil.
- India suffers from similar extensive illegal mining.
It is generally observed that illegal activities of this nature are much more prevalent in poorer countries.
According to the International Institute for Environment and Development (IIED), artisanal mining in India is generally considered as unauthorised or illegal, although it is not seriously prevented by the government, mainly because such activities provide at least some sustenance to local people living below the poverty line that the government cannot provide employment to.
The Human Rights Commission found that there are between 8,000 and 30,000 illegal miners in the country, locally known as zama zamas. These miners often work in decommissioned mines, seeking quick riches despite the dangers involved.
Causes of illegal mining
The South African Institute of International Affairs (SAIIA), in The Economics of Illegal Mining [in South Africa], posits that regional poverty largely accounts for the supply of illegal miners. This means that the participants are people who have nothing to lose. They are prepared to take risks that might lead to the loss of life to make a living.
Firstly, most illegal mining activities are driven by the perception of minimal work that produces much higher income than safer legal work that pays a minimum wage. This puts artisanal miners at risk of unpalatable conditions and the risk of arrests, court cases, and working in unsafe abandoned mines which are also prone to territorial gang wars.
Secondly, the demand for illegally-mined minerals is strong, so the reward exceeds the cost of the risks incurred.
Thirdly, the profitability of illegal mining, points to inefficiencies in the formal industry and the government’s inability to adequately address the regulatory and policing aspects.
The failure of government to address the underlying issues of poverty, porous borders and weak supply chain tracking that drive the illegal smuggling of explosives used in illegal mining from neighbouring countries, further encourages illegal mining.
Recommendations
The Human Rights Commission conducted a study to understand the challenges relating to artisanal underground mining. Its experts and researchers distinguished between informal mining and illegal mining – the difference being that the former choose to sell their mined product and ‘pay royalties to a chief’, and the latter have links to organised crime.
The size of this industry and its growth trend make it difficult to effectively eradicate it. The most feasible approach would be for African countries to collaborate and partner with the mining industry and review policy interventions that support artisanal mining. This will attract small players and presenting an incentive to illegal operators.
Ledwaba’s assessment of the Mineral and Petroleum Resources Development Act, is that it does not cater to the needs and spectrum of artisanal small mining (ASM) activities, is pro large-scale mining, and has requirements that are costly and onerous for artisanal miners.
A trajectory needs to be further explored on how to bring the artisanal illegal miners into the fold.
Proposed framework for bring illegal miners into the artisanal fold
Pontsho Ledwaba’s recommendations include:
- Lowering the barriers to compliance;
- Increasing support to artisanal small mining; and
- Alternative options, such as allowing limited mining in controlled areas as De Beers did with farmers in the Kimberly area.
She believes that the artisanal small mining sector can be transformed into an engine for sustainable development, particularly in rural areas, if challenges are adequately addressed through a series of well-targeted interventions.
There are also lessons to be learnt from countries known for having particularly strict regulations and enforcement mechanisms to eradicate illegal mining such as Australia, Canada, and countries in the European Union.
The economic impact, estimated at billions, underscores the importance and urgency of finding effective solutions that will address regulatory gaps and governance inefficiencies to accommodate artisanal miners.
The financial services sector in South Africa stretches from the South African Reserve Bank to micro lenders, cooperative banks, stokvels and loyalty programmes that have become popular for customer engagement and enhancement of services. This is articulated in the WOW report on the banking industry in South Africa.
Banking, as experienced or aspired to by citizens, has been mainly carried out by the five largest banks – Standard Bank, First National Bank (FNB), Nedbank, Absa, and Investec, which collectively held 89.5% of total banking sector assets at end-March 2023, and increasingly by newer entities manifesting as simplified low-cost banking such as Capitec, digital banks such as TymeBank and Bank Zero, and pure fintech companies, with some of them backed by large corporates such as Vodacom.
Commercial banks present and future
Commercial banks essentially have two legs, retail and corporate, with the latter including business banking, advisory services, trading, investing, structured products, lending and so on. Retail is driven by retail deposits and retail lending, but generally, corporate activities are the bedrock of the banking sector.
The strategies of large commercial banks are tested by competition and fuelled by technological innovation in IT and the advent of AI, at a time when the economic environment is weak. Most of them are looking at ways to fend off competition by acquiring promising fintech startup companies.
Grey areas between the historically well-defined segments are getting wider with IT and AI blurring the borders between traditional banking, digital banking and fintech companies.
The rise of Capitec and changing brand dynamic
Technology and the increased use of internet banking steered large commercial banks to close many branches, with the cost, rent and salary savings deemed considerable enough to proceed. The functionality of centralising the monitoring of operations and rectifying transactions changed the banking experience.
Now customers visiting a branch must still phone the appropriate department in head office to resolve issues. The newcomer on the South African banking scene, Capitec, followed a slightly different logic, offering a narrower range of services, which account for 90% of banking transactions, in smaller size branches.
Capitec chose to increase its branches and ATMs, which proved to be a successful strategy, contrarian to the historical large banks’ strategies.
Since opening for business on 1 March 2001, Capitec went from 55 branches and 25,000 clients to more than 840 branches and 15,000,000 clients in 20 years.
The table below shows a comparison of number of customers vs branches and ATMs of the major banks.
The price:earnings ratio of the banks show that the market values Capitec higher than any of the major banks. This is despite the fact that Capitec has the lowest Tier 1 capital buffer, and is thus exposed to higher risk of volatility. Capitec’s P:E stands at 24.8 while the big four P:E range is between 11.1 and 6.4.
Newcomers in the financial sector
Traditional banks do provide digital banking, which is increasingly becoming the channel of choice for banking transactions, but their physical branch network continue to exist, enabling a wider range of services. Those services do not account for banks’ volumes and profits.
In South Africa, three new players have entered the arena of digital banking – Bank Zero, TymeBank and Discovery Bank. They are all digital banks as they do not have any physical retail outlets network, but provide standard banking services. They offer a bank account, debit card, transfer and withdrawal services. By 2023, TymeBank had over 8.5 million customers, Discovery Bank 2 million and Bank Zero over 700,000.
TymeBank and Bank Zero, as the latter’s name implies, focused on low and zero bank account fees. TymeBank’s go-to-market strategy is through Pick n Pay retail outlets, where they have installed terminals. Their message is that customers open their account at these terminals, and can withdraw and deposit cash at PnP tills, a commercial arrangement that was part of their strategy. Cost leadership and convenience of essential service elements created greater differentiation. Discovery Bank followed a different strategy, targeting upmarket customers with a smaller base, but higher costs, sold on the perception of prestige.
Fintech companies represent the next wave of entrants into the financial sector. Capitec CEO Gerrie Fourie stated that he is not afraid of competition from another bank like the one launched by Old Mutual, but rather of companies like Apple.
Possibilities, accessibility, and portability of smartphones are almost endless. Terms like “wallets” encapsulate what is coming. People have a wallet on their phone where money is stored and can be transferred to another phone wallet of a customer or beneficiary directly from one phone number to another, with very low to no transaction costs.
There is a growing trend of telecom providers offering banking services and lifestyle services with the likes of Vodacom extending transactions with lending facilities, with the launching of Vodalend for personal and small business loans in partnership with Old Mutual. These trends are well articulated in the WOW report on the banking industry.
The missing but not impossible link for mass penetration in rural South Africa is a convenient, easily accessible, and cost-effective channel for cash deposits and withdrawals, driving demand in the retail sector through the likes of Pick n Pay for TymeBank and Spar for Bank Zero.
Technological innovation benefitting the mass consumer market with lower cost, easier, and portable financial services indeed makes the fintech players the next competitors for commercial banks.
Is there a need for a state bank?
In this context, the question of establishing a state bank is still to be answered. If government was to adopt more progressive models like the one implemented by the likes of TymeBank, underserved rural areas could get access to financial products not offered by mainstream banks.
Unfortunately, the government has not demonstrated technical capability to establish a bank. Careful planning and oversight to ensure accountability, efficiency, and financial sustainability are key ingredients which the government does not seem to have in place.
Ultimately, the decision to pursue a state bank should be guided by a comprehensive assessment of its potential benefits and risks, considering the evolving dynamics of South Africa’s financial landscape and the imperative of promoting inclusive economic growth.
Confectionery, often referred to simply as sweets or candy, holds a special place in the hearts and palates of consumers worldwide. With sugar and cocoa as its main ingredients, the confectionery industry provides various indulgent treats, from chocolates and candies to pastries and marshmallows.
The South African confectionery industry is dynamic and vibrant, and continues to evolve to meet the needs of consumers, although it faces challenges such as rising ingredient costs and competitive pressures.
The Power of Sensory Experience
The allure of confectionery lies in its ability to evoke tempting aromas, vibrant colours, and irresistible flavours, creating a multisensory indulgence for consumers.
Whether savouring a decadent chocolate truffle or enjoying a tangy gummy bear, confectionery products captivate the senses and provide moments of joy and pleasure. This sensory experience forms the foundation for brand differentiation and consumer loyalty in the competitive confectionery market.
Brand Differentiation and Premium Pricing
Successful confectionery brands leverage their unique sensory experiences to differentiate themselves in the marketplace and maintain premium pricing. Iconic brands like Nutella have achieved enduring success by offering singularly successful flavour profiles that resonate with consumers.
Lindt, a Swiss chocolate brand known for its premium quality ingredients and artisanal craftsmanship, commands higher pricing despite intense competition from conglomerates like Cadbury and Nestlé. The singular focus of Lindt on chocolate production allows it to prioritise quality and innovation, distinguishing itself from competitors with diverse product portfolios.
More broadly, as illustrated in the WOW report on The Confectionery Industry in South Africa, some well-known chocolate brands in South Africa have pricing that is vastly different on a cost per gram basis as illustrated in this table:
Competitive Landscape in South Africa
In South Africa, the confectionery industry faces challenges posed by rising sugar and cocoa prices, changing consumer preferences, and competitive dynamics. Premium brands like Lindt may face pressure to maintain market share as cost-conscious consumers seek cheaper alternatives.
Conglomerates like Cadbury and Nestlé, with diverse product offerings beyond confectionery, must balance brand management and resource allocation across multiple categories. This complexity can impact brand focus and market positioning, affecting competitiveness in the confectionery segment.
The Biggest Trend Driving Competitiveness
One of the biggest trends contributing to competitiveness in the South African confectionery industry is the shift towards healthier and more sustainable products. With increasing consumer awareness of health and wellness, brands that offer sugar-free, reduced-sugar, and ethically sourced confectionery options are gaining traction.
By innovating with alternative sweeteners, natural ingredients, and eco-friendly packaging, brands can appeal to health-conscious consumers and differentiate themselves in the market.
Conclusion
The South African confectionery industry offers a tantalising array of indulgent treats that captivate consumers’ senses and evoke moments of pleasure. Successful brands differentiate themselves through unique sensory experiences, premium quality ingredients, and strategic branding.
However, in a competitive landscape shaped by changing consumer preferences and economic factors, brands must adapt to emerging trends, prioritise innovation, and maintain consumer trust to stay ahead of the curve. By embracing trends in health, sustainability, and sensory innovation, confectionery brands can navigate challenges and seize opportunities for growth and success in the dynamic South African market
