Returnees make up 10% of skilled labour force

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The return of skilled South Africans from abroad has been a boon to the economy. South Africa may have made it difficult for firms to hire skilled foreigners. It has not done much, fortunately for the sake of the economy, to inhibit the flow of skilled South Africans back home.

It should be doing all it can to encourage the diaspora to come back home.

The numbers of returning South Africans reversing the brain drain have been very impressive. I have been given an estimate of the number of returning professionals and managers by employment placement firm Adcorp.

Adcorp estimates a very impressive 370 000 skilled migrants have returned to South Africa since 2009. In recent years the economy has managed to do without attracting skilled foreigners in magnitude by absorbing large numbers of its own. Some sense of the importance of these returnees for the economy is indicated below.

The average real wage (in 2008 prices) at which Adcorp was able to place young professionals or managers doubled through the boom years between 2003 and 2008, from R150 000 a year in 2003 to R350 000 in 2009.

To convert these salaries to 2013 money, multiply by about 1.3 times. In recent years the real salaries at which Adcorp has been able to place clients have declined significantly.

Clearly, South African firms hiring skilled labour could have benefited from access to immigrant skills before 2009, just as they have benefited from migrant skilled labour since.

To give a better idea of the importance of 370 000 skilled entrants to the labour market, we can refer to data supplied by the SA Revenue Service (Sars) in its recently-issued 2013 tax statistics, which can be found on the national Treasury website. Sars reports 15 418 920 individuals as registered for PAYE.

Not all people earn enough to have to pay income tax (more than R60 000 a year in 2012). The numbers of registered taxpayers has increased dramatically in recent years as firms were forced to include all workers in their tax filings from 2011.

Of the 15.4 million registered workers, some 5.1 million actually paid income tax. Of these taxpayers, 3.2 million earned a taxable income of more than R120 000 – perhaps qualifying them as skilled. These 370 000 returning migrants therefore represent more than 10 percent of the skilled labour force.

It is of interest to note that 338 724 taxpayers reported taxable income of more than R500 000 in 2012. Of these, 73 250 taxpayers enjoyed taxable income of more than R1 million in 2012, of whom 16 952 earned between R2 million and R5m. A mere 2 787 taxpayers reported taxable income of more than R5m.

What makes these statistics especially interesting is that the 15.4 million taxpayers registered with Sars far outstrip the employment numbers recorded by Statistics SA in its Quarterly Labour Force Survey, which records employment and unemployment from a survey of households. Stats SA reports a labour force of 18 million, of whom only 10 million are estimated to be formally employed.

Such grave dissonance between the numbers of employees recorded by Sars and by Stats SA needs to be urgently resolved if we are to say anything useful about the South African labour market and the impact of immigration and migration on it and to design policies accordingly.

Brian Kantor is the chief economist and investment strategist at Investec Securities.


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