Massive hiring freeze trend in South Africa
Hiring freezes and layoffs have become more common domestically and abroad in 2022 with US businesses and South African CEOs looking to slash costs ahead of a possible recession, says Nedgroup.
The group’s latest Pulse Report for November, which analysed global and domestic markets, found that Big Tech has been letting several employees go since December 2021.
Companies such as Elon Musk’s Tesla and Twitter, retail giant Amazon and tech conglomerate Meta have all seen upwards of tens of thousands of employees being laid off work.
According to Nedgroup, the most notable of the long list of tech companies reducing their workforce has been Twitter, dominating headlines after Elon Musk’s acquisition on 28 October.
“He embarked on a massive revamp of the teams and business model of Twitter and laid off 50% of its 7,500 employees. The announced layoffs in the tech sector this year are sparking investor concerns that broad labour market deterioration is on the horizon,” said Nedgroup.
Goldman Sachs, however, believes that tech layoffs are not indicative of such a slowdown due to the following:
- the tech sector making up a small share of aggregate employment,
- tech job openings are well above pre-pandemic levels,
- past spikes in announced tech layoffs have not preceded spikes in announced total layoffs
In South Africa, however, layoffs, regardless of the sector, have been eyed as a way of navigating uncertain economic times by big business.
The latest CEO Outlook for South Africa from financial services firm KPMG found that over 80% of CEOs in the county have implemented or plan to implement a hiring freeze in the next few months.
KPMH researched 50 top CEOs from various industries between July and August to learn about their perspectives on the nation and its future. The poll of domestic CEOs was then compared to 1,300 other global executives.
According to KPMG, organisations and their executives are being pressured to reevaluate their strategies in light of the impending recession, with talent retention being one of the key issues being addressed.
Out of the surveyed, South African CEOs, 36% of them stopped hiring new employees, almost in line with the 39% of CEOs globally who have done the same.
The country’s unemployment rate remains a level below the pre-pandemic period despite rebounds made in certain economic sectors. Economists from the Bureau of Economic Research reported that despite a recent one percentage point increase in the unemployment rate from 32.9% to 33.9% – it remains bleak.
They noted that employment recovery had lagged that of real GDP.
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