SA CEOs expect more job cuts in 2021, PwC report shows
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JOHANNESBURG - For the first time since 2010, more South African businesses are expecting to reduce the number of their staff in 2021 than increase them.
This is according to the latest edition of the PricewaterhouseCoopers (PwC) global annual survey on the outlook of chief executives.
The PwC’s 24th Annual Global CEO report, released yesterday, said that 40 percent of chief executives surveyed planned to reduce their headcount this year.
Only 16 percent – compared to 42 percent in 2020 – of local businesses expected to increase their headcount over the next 12 months, said the report, and 40 percent of South African chief executives compared to 21 percent globally planned to reduce their staff in the year ahead.
“The proportion of South African chief executives expecting to reduce staff has exceeded those expecting to increase it for the first time — and by a margin of 25 percentage points. This is unprecedented in the history of the survey,” said the report.
South Africa has been participating in the survey since the 13th edition in 2010 and this is the first time since then that a greater proportion of businesses were expecting to reduce their staff than those expected to increase it. The report said it was concerning that given South Africa’s rising inequality and unemployment challenges that 51 percent of South African chief executives compared to 37 percent globally had reduced staff in the past 12 months.
Only 43 percent of organisations compared to 35 percent globally expect their headcount to remain the same.
The report surveyed more than 5 000 chief executives in 100 countries, including 37 South African chief executives, between January and February 2021. Its findings were based on the economic outlook at the time – namely, a level 3 lockdown period, issues arising from the roll-out of vaccinations, and load shedding. The South African economy contracted by 7.2 percent in 2020 and was expected to rebound by 3.3 percent this year.
The economy is expected to average 1.9 percent in 2022 and 2023 on lingering economic constraints, including the weak labour market, financially distressed public corporations, and fragile business and consumer confidence.
On a positive note, the percentage of CEOs expressing confidence in growth was up from 22 percent in 2020 and 42 percent in 2019, representing the highest level of optimism since the survey started asking this question in 2012. In South Africa, 57 percent of CEOs believed global economic growth would improve over the next 12 months.
PwC Africa chief executive Dion Shango said after a year of economic and political uncertainty coupled with human tragedy, it was encouraging to note an upswing in sentiment among chief executives about global economic growth.
“Although we are not out of the woods, CEOs see a path forward – for the global economy and for their own organisations. As business leaders prepare for a rebound in the economy, a critical question will be: which management approaches should business retain from the rapid response mode most of them adopted during 2020?” said Shango.
The report, however, said unemployment and inadequate basic infrastructure were the top threats to business growth prospects.
The report found that 73 percent of South African chief executives were concerned about unemployment compared to 21 percent among their global peers.
At the same time 65 percent of South African chief executives who participated in the survey believed that inadequate basic infrastructure was a threat compared with 19 percent of their global counterparts.