Picture: Ivan Alvarado, Reuters
Employment in the consulting engineering industry declined by 4percent year-on-year in the second half of last year to an estimated 23349 jobs.

However, the number of firms looking for engineers increased to 44.9percent from 32percent in the previous six months and 40percent in the last six months of 2015, according to the latest biannual economic and capacity survey conducted by Consulting Engineers South Africa (Cesa).

The survey report said there was also a notable increase in demand for other technical staff to 72percent in the second half of last year from 38percent in the previous six months and 4percent in December 2015.

Fee earnings in the last six months of last year rose by 1percent compared to the first half of the year but were lower than the expected 6percent increase in the previous survey.

Survey respondents also expect earnings to drop by 7percent in the first six months of this year compared to the previous six months.

Chris Campbell, the chief executive of Cesa, said yesterday that considering the trends in the industry, there were indications that earnings had reached an upper turning point with a softer growth outlook in the medium term for the industry.

“Business confidence levels first need to be restored to encourage higher levels of investment and kick start the beleaguered South African economy,” he said.

Campbell said service delivery, especially at municipal level, remained a critical burning issue, but the consulting engineering industry was threatened by incapacitated local and provincial governments.

As major clients to the industry, it was important that these institutions became more effective and proactive in identifying needs and priorities and more efficient in project implementation and management.

Payment remains a serious issue for the industry, with an estimated R6billion in earnings currently outstanding after the 90-day period.

This is despite the percentage of fees outstanding for longer than 90 days as a percentage of total estimated income moderating to an average of 23.1percent in December from 25percent in the first six months of last year.

The survey report said foreign clients accounted for 61percent of earnings outstanding for longer than 90 days, followed by the private sector (30percent), local authorities (4percent), state owned enterprises (2.2percent), provincial government (1.4percent) and central government (1percent).

The public sector remains the most important client to the industry, with the combined contribution increasing to 67percent in the last six months of last year from 58percent in the previous six months. This was largely driven by the notable higher contribution by central government to 10percent from 4percent in the previous six months and 5.9percent the second half of 2015.

The contribution to fee earnings by the private sector fell to 33percent in the last six months of last year from 41percent in the previous half year.

The survey report said this was the lowest contribution by the private sector since the June 2004 survey and well below the two-year and five-year average.

BUSINESS REPORT