South African employers report conservative hiring intentions for the coming quarter. Of the 751 employers who participated in the survey, 12% expect to increase staffing levels, 5% forecast a decrease and 81% anticipate no change.
Once the data has been seasonally adjusted, the resulting Net Employment Outlook is +7%. Hiring prospects are unchanged quarter-over-quarter and improve by 2 percentage points year-over-year.
Lyndy van den Barselaar, Managing Director of Manpower SA, provides insights into why South African employers are reporting cautiously optimistic hiring intentions for the April to June time frame:
“As global economic uncertainty continues, many businesses will be more cautious about increasing staffing levels. The majority of local employers said they anticipated no change in their staffing levels for the upcoming quarter, which is a reflection of this economic uncertainty translating into the local employment market,” she says.
Workforce gains are anticipated in all five regions during 2Q 2017. The strongest labour market is forecast in Western Cape, where employers report a Net Employment Outlook of +14%. Elsewhere, employers report cautiously optimistic Outlooks of +9% in both Free State and KwaZulu Natal, while Outlooks stand at +6% and +4% in Eastern Cape and Gauteng, respectively.
“The Western Capes economy is dominated by the City of Cape Town, which is an extremely popular tourist destination for local and international holiday makers. There is a strong push for development in the tourism sector, as was seen by government’s R100-million investment into building the Plettenberg Bay Airport road, the proposed completion of the N1 road coming into Cape Town, the R832 million expansion currently underway at the Cape Town International Convention Centre, the building of the new Zeiss Museum of Contemporary Arts Africa at the V&A Waterfront, as well as the expansion and refurbishments of various new hotels in the city. The tourism sector is the largest employer in the region, employing more than 4000 people with the prospects of more jobs created as the sector continues to grow. This could definitely be a contributing factor to the positive employment outlook in the region,” explains van den Barselaar.
“While Gauteng remains the economic hub of South Africa, employers in the province have registered a conservative outlook of +4% for the second consecutive quarter. Initiatives around economic transformation by the Gauteng provincial government are aimed at stimulating key aspects of the market, which will create opportunities for further employment in the province in the coming quarters. These initiatives are focused on encouraging local manufacturing of goods, support for black-owned firms, and unlocking employment opportunities for all people across the province; as reported in the State of the Province address last month.”
Quarter-over-quarter, hiring intentions are 4 percentage points stronger in KwaZulu Natal and improve by 2 percentage points in Free State. Elsewhere, hiring prospects remain relatively stable in Eastern Cape and Western Cape, while Gauteng employers report no change.
Hiring plans improve by 9 percentage points in Free State and Western Cape when compared with the second quarter of 2016, while a slight increase of 2 percentage points is reported in KwaZulu Natal. However, Gauteng employers report a year-over-year decline of 2 percentage points.
Employers in all 10 industry sectors forecast an increase in payrolls during the upcoming quarter.
Transport, Storage & Communication sector employers report the strongest hiring intentions with a Net Employment Outlook of +15%, while Outlooks stand at +11% in both the Agriculture, Hunting, Forestry & Fishing sector and the Finance, Insurance, Real Estate & Business Services sector.
Employers in the Wholesale & Retail Trade sector report cautiously optimistic hiring plans with an Outlook of +10%, while Outlooks of +9% are reported in both the Electricity, Gas & Water Supply sector and the Restaurants & Hotels sector. Meanwhile, the most cautious Outlook of +1% is reported by Mining & Quarrying sector employers.
“The current push for investment into improving existing and also building new infrastructure, especially that of roads, is a contributing factor to the expected growth in hiring in the Transport, Storage & Communication sector. Another possible contributing factor is the increase in service providers providing last mile Fibre to the Home (FTTH) and Fibre to the Business (FTTB), to support the growth of South Africa’s digital transformation and economy at large,” explains van den Barselaar.
Hiring prospects improve in six of the 10 industry sectors when compared with the previous quarter. The most noteworthy increase of 10 percentage points is reported by Transport, Storage & Communication sector employers, while Outlooks are 6 and 5 percentage points stronger for the Construction sector and the Wholesale & Retail Trade sector, respectively. However, hiring plans weaken in four sectors, including the Restaurants & Hotels sector with a decrease of 5 percentage points and the Electricity, Gas & Water Supply sector, where employers report a decline of 4 percentage points.
Year-over-year, Outlooks strengthen in five of the 10 industry sectors, most notably by 13 percentage points in the Agriculture, Hunting, Forestry & Fishing sector. Elsewhere, increases of 12 and 9 percentage points are reported in the Transport, Storage & Communication sector and the Wholesale & Retail Trade sector, respectively. Meanwhile, hiring prospects weaken in three sectors, including the Construction sector and the Mining & Quarrying sector, where employers report decreases of 4 percentage points.
Participating employers are categorized into one of four organization sizes: Micro businesses have less than 10 employees; Small businesses have 10-49 employees; Medium businesses have 50-249 employees; and Large businesses have 250 or more employees.
Staffing levels are expected to grow in all four organization size categories during 2Q 2017. Large employers report upbeat hiring prospects with a Net Employment Outlook of +18%, while Outlooks stand at +8% and +6% for Medium- and Micro-size employers, respectively. The most cautious Outlook of +3% is reported by Small employers.
Quarter-over-quarter, Micro employers report an improvement of 5 percentage points, but the Outlook for Small firms is 3 percentage points weaker. Elsewhere, Large employers report no change and the Outlook for Medium employers remains relatively stable.
Related: Finding Your Staffing Partner
When compared with this time a year ago, Outlooks improve by 6 percentage points for Micro employers and by 5 percentage points for Large employers, while Medium employers report an increase of 2 percentage points. Meanwhile, Small employers report relatively stable hiring plans.
Globally, second-quarter hiring confidence is strongest in Taiwan, Japan, Slovenia and India. The weakest forecasts are reported in Brazil, Italy, Belgium and Switzerland. Hiring plans improve in 17 of 43 countries and territories when compared quarter-over-quarter, decline in 15, and are unchanged in 11. The year-over-year trend reveals a more pronounced uptick with Outlooks strengthening in 25 countries and territories, weakening in 14, and remaining unchanged in three.
Tsogo Sun Entrepreneurs Takes On 30 New Businesses
22 Women and 20 men – attended a three-day induction at Tsogo Sun’s Crowne Plaza The Rosebank hotel in Johannesburg from 31 January to 2 February.
With new hope burgeoning throughout the South African business environment as fundamental political change sweeps through the country, the Tsogo Sun Entrepreneurs programme has inducted 42 new beneficiaries from 30 different SMMEs for a year of intense training, coaching, mentorship and support – to assist them to professionalise and grow their businesses. This brings to 242 the total number of entrepreneurs supported by the programme.
The inductees – 22 women and 20 men – attended a three-day induction at Tsogo Sun’s Crowne Plaza The Rosebank hotel in Johannesburg from 31 January to 2 February. This represented the commencement of the programme’s 2018 development year, which incorporates the provision of customised analysis and strategic plans tailored to the specific needs of each enrolled business, business management courses provided by the University of Cape Town and facilitated by GetSmarter; Financial literacy courses through the Colour Accounting system, Microsoft Office courses, and Sales & Marketing training. The beneficiaries are each assigned a business analyst, a financial mentor and a leadership coach who work with them to implement their business strategies throughout the year.
This year’s class of 2018 entrepreneurs is made up of 30 small businesses operating in provinces across six provinces in South Africa in a diverse range of market sectors that include: tourism, ICT, cleaning, professional services, manufacturing, retail, health and beauty, agriculture and secretarial and administrative services. Candy Tothill, Tsogo Sun’s GM of Corporate Affairs, says “Part of the value of such a diverse group is that it creates opportunities for the businesses to trade with each other.”
She adds, “Job creation is increasingly crucial in South Africa, as unemployment has reached unprecedented levels, particularly among the youth. Through the Tsogo Sun Entrepreneurs programme, we identify and assist people running their own businesses to professionalise their operations in an effort to make them viable employers who are sustainable businesses and contributors to the growth of the country’s economy. At the same time, we encourage them to be “conscious” consumers who procure local products and services and support each other by keeping it local and proudly South African. We are interested in changing their approaches from “managerial” mindsets to “leadership” mindsets, and so we motivate them to be fearless in their approach to growth with purpose. The programme provides them with the skills to enhance their strategic planning and performance and the wisdom to “pay it forward” by training them to become leaders in their communities. The role that the programme’s mentors and coaches play in instilling these values is of great significance to the achievement of our objectives.”
Belinda Francis, MD of Tych Solutions, a generalist recruitment agency based in Durban with offices in Johannesburg and Eastern Cape, was enthusiastic about joining the Tsogo Sun Entrepreneurs programme. “Tsogo Sun is an amazing brand to be associated with, but more so, having met the team at a Supplier Showcase and heard others’ success stories, I was hungry to learn more and be a part of this journey. I don’t have an active partner and so I believe this programme will help to grow and empower me and my entire team even further. I am big on empowering and developing people and small businesses – and this will certainly create the platform for me to do so.”
Entrepreneur Carol Mlangeni, director of Enhle Creatives Photography & Design, also based in Durban, says she was browsing the internet looking for guidance on how to resolve issues within her company when she saw a Tsogo Sun Entrepreneurs advertisement – and immediately responded. “I have issues within my business and I have been looking for answers on how to resolve them and grow my business and my brand awareness – I hope to achieve this through this programme.” Mlangeni adds that her future plans include providing job opportunities for “other aspiring enthusiasts like me”.
Thato Senosi is Founder of Magauta Designs and Projects, which supplies custom-made curtains, upholstery, and furniture repairs, and is based in Katlehong in Ekurhuleni. He was introduced to Tsogo Sun Entrepreneurs by his mother, Carol Senosi, who joined the programme in 2016 and was a finalist in the Entrepreneur of the Year Awards. He says he joined the programme because
“I believe that entrepreneurship is a science, and one needs to put together all the necessary tools and formulas to build a successful business – and this programme offers that. My expectations this year are to identify missing formulas and find solutions, to be monitored and supported, and helped to become a great version of myself so I can inspire others, because no man is an island.”
His plans for the future include starting his own textile manufacturing company and bringing industry into the township to help combat some of the social challenges in his local community.
Says Tothill, “It’s encouraging to see the growing reach of Tsogo Sun Entrepreneurs throughout the country and in a diverse range of businesses, and we wish our new beneficiaries – the Class of 2018 – every success through the year as they discover new ways to develop themselves and their enterprises.”
Tsogo Sun has a portfolio of over 100 hotels and 13 casino and entertainment destinations throughout South Africa, Africa and the Seychelles. For more details, visit https://www.tsogosun.com, follow on Twitter @TsogoSun or like on Facebook /TsogoSun.
2018 National Budget: What To expect?
The South African economy has experienced undue economic pressure and decreasing investor confidence.
Pressure was undoubtedly on the South African National Treasury to take active steps to address short-comings and enable growth within the local economy.
“The anticipation of 2018/2019 Annual Budget Speech is growing; with the hope that it will bring improvement in the economy, address key challenges and create tangible solutions for consumers and businesses alike,” says Hugo van Zyl: FNB Fiduciary Specialist.
With the upcoming Budget Speech on the 21st of February; we looked to the past year and highlight a few key financial key points that may still affect consumers this year:
Personal Income Tax
In 2017, minor adjustments were made to this tax bracket last year; with 45% for taxable income above R1.5 million being introduced. This increase in taxes payable for income earners above the R1.5 million income thresholds saw significant pressure on tax payers having to manage an existing budget with lower disposable income.
We foresee that the Personal income tax rate will remain the same for this financial year. With this in mind we encourage tax payers to avoid incurring unnecessary debt and ensure that one’s debt to income ratio is minimized at all costs.
Last year, an additional R5 billion was added to the previously announced R32 billion. Approximately 30% of South African parents save for their child’s education on a yearly basis. With the cost of education rising by about 10% each year, parents are encouraged to continue making provision for their children’s future. In addition, the recent funding announcement for free university education to students from poor households in South Africa will be announced in the upcoming budget together with possible tax increases.
Exercise duty rates for tobacco and alcoholic products
The Sin Tax has increased previously between 6.1% and 9.1%. We anticipate this to also increase as is the case every year. We advise that consumers should consider reducing their consumption to ease budget constraints on their wallets and more importantly, improve their health.
Tax-free Savings Accounts
The annual Tax Free Savings limit increased from R30 000 to R33 000 last year. This was great news for investors and we predict that this will remain the same this year.
The financial year ends on the 28th of February 2018. South Africans still have an opportunity to take advantage of tax free savings, encompassed in the benefit of exemption from taxes like dividends tax, capital gains tax etc. The benefits will give a huge boost to your investment over time. The key to investing is to invest early, stay invested and in time you will reap the rewards, regardless of how much you invest per month.
Dividend Withholding Tax
The rate increased from 15% to 20%, which was put into effect 22 February 2017, and any dividends incurred on or after this date attracted the increased rate. We do not foresee any further change during this Budget speech.
We predict a possible increase in the VAT rate as it can raise large amounts of revenue. Between 2015 and 2017, the general fuel levy increased by 30c/l. We expect an increase in the fuel levy; but the extent of the increase will depend on whether the VAT rate is increased.
Capital Gains Tax
An increase in the annual inclusion for individuals and special trusts is expected.
Chantal Marx; Head of research FNB Securities says that, “The MTBPS painted a very negative picture of the South African fiscus in October last year, and from an investment perspective, we will be very focused on how government plans to make up what is expected to be a significant revenue shortfall. However, the expenditure component will be equally important.”
Possibilities to increase revenue:
- Disposing of assets like government’s share in Telkom.
- Increased taxes:
- A possible increase in VAT. If this is the case, there could however be some relief for grant recipients through higher grant increases as well as the zero rating of certain items.
- Fiscal drag (not adjusting tax brackets to compensate for inflation).
- A possibility of a further increase in the marginal tax rate for the highest income earners.
- Given the stronger rand, treasury could use the opportunity to raise the fuel levy.
On the expenditure side, the line is even finer and there is very little government can do to limit the states’ spending bill. The wage bill is expected to grow a little ahead of inflation and grant payments could increase to provide relief for possible VAT hikes. Capital expenditure growth is anticipated to remain negative in real terms.
We anticipate an improvement in deficit targets relative to the MTBPS on the back of revenue raising measures. This will signal a return to fiscal consolidation which is likely to be bond friendly, particularly if enough is done to avert a Moody’s downgrade.
Of course, equities tend to be a bit of a balancing act. On the one side higher tax rates and continued pressure on fixed investment expenditure from government could have a near term dampening growth impact. On the other side however there are a number of underpins for equities. Valuations may be supported by lower risk-free rates (government bond yields) and if South Africa avoids a downgrade from Moody’s, the SARB may feel confident to cut interest rates.
“Given potentially higher business and consumer confidence flowing from fiscal discipline, the longer term growth outlook for the economy is likely to improve and this will ultimately filter through to a better corporate earnings outlook,” concludes Marx.
Comment by Paul Makube, Senior Agricultural Economist at FNB Business says that “the current budget speech comes on the backdrop of renewed pressure on the agriculture industry to accelerate transformation as well as severe drought that is currently ravaging the Western Cape. Confidence in the sector nose-dived last year and further investment has been subdued.”
Makube expects further details on financing models that are envisaged in partnership with the Banking sector as well as the increased allocations for the Department of Agriculture, Forestry and Fishing (DAFF) and the Department of Land and Rural Development (DLRD) for agriculture support and fast racking land reform. The ruling party has prioritised land reform through its resolution on expropriation and it is therefore expected that this will be a bigger focus for the budget.
The quantum is difficult to predict given the tight fiscal situation.
Jesse Weinberg, Head of the SME Customer Segment at FNB Business says “Ideally we would want to see continued focus on supporting and growing SME’s in South Africa with funding and reducing compliance requirements, as we have seen in previous budgets.
“Ideally we will see a continued effective channelling of funds through to government programmes, and an increased emphasis on the various programmes and departments working together to deploy these funds. Another theme that we are hoping to see coming through is the focus on reducing regulatory and administrative burdens on small businesses which often presents obstacles that hamper their ability to operate and grow. These include both tax and government compliance requirements,” shares Weinberg.
Please visit the FNB Blog to view the 2018 Budget preview from the FNB Economics team: https://blog.fnb.co.za/2018/02/2018-budget-preview
#SONA2018: Upbeat Address Offers Inspiring Message For South African Entrepreneurs
Small & Medium Businesses in South Africa are likely to take inspiration from the upbeat tone of President Cyril Ramaphosa first State of the Nation Address.
Small & Medium Businesses in South Africa are likely to take inspiration from the upbeat tone of President Cyril Ramaphosa first State of the Nation Address and its positive outlook on how smaller businesses can play a major role in spurring economic growth and addressing the challenge of unemployment, says Pieter Bensch, Executive Vice President, Africa & Middle East at Sage.
“We are pleased to hear the new president of South Africa acknowledge that the growth of our economy will be sustained by small businesses,” says Bensch. “It is especially heartening to hear that he is committed to building a small business ecosystem that assists, nourishes and promotes entrepreneurs.”
“Entrepreneurship doesn’t happen in a vacuum – it is the result of collaboration between big business, government, business builders, universities and other stakeholders to build the skills, infrastructure and support systems entrepreneurs need to succeed.”
Bensch adds that the CEO Small Business Fund – which currently stands at R1.5 billion – is an outstanding example of how government and big business can work together to nurture entrepreneurship. “I was excited to hear that government is finalising a small business and innovation fund targeted at start-ups and that it also has plans to reduce the regulatory barriers for small businesses,” he says.
“These sorts of interventions could help us to dramatically improve the success and survival rate of South Africa’s small and start-up businesses.”
President Ramaphosa tackled the burning crisis of youth unemployment when he mentioned the launch the Youth Employment Service initiative, which will place unemployed youth in paid internships in companies across the economy.
“Skills in the ICT sector remain a challenge and big business must play a central role supporting government as far as possible through internships and learnerships. This, along with existing initiatives such as the Employment Tax Incentive, could play a major role in upskilling young South Africans – enabling youngsters to play a role in the digital economy, while supplying the skills every business needs to be globally competitive,” Bensch says.
Adds Bensch: “Our new President’s speech was pragmatic, but he also looked towards the future. Industry 4.0 is likely to change the skills employers will be looking for, how entire industries will operate, and the nature of work itself. It was great to hear President Ramaphosa talk about science, technology and innovation as opportunities for our country – we need to seize the chance to put South Africa right at the forefront of the digital industrial revolution if we are to unleash its full potential.”
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