Posted on www.skillsportal.co.za : 12-OCT-06

The last 12 to 15 years have been turbulent times for us all especially for the personnel management environment. Human resource (HR) practitioners have had to cope with dramatic changes in the legal framework, a much more dynamic and fast changing economy, new technologies, international competition for scare skills, employment equity, an inconsistent performance by the education system, a new skills development framework and new forms of production and supply chain technology.

In general, the HR practitioners have managed this complex minefield with enthusiasm and creativity. As an industry there are many successes that you can be proud of. The fact that the economy is growing so much faster today is partly due to your success. The increase in the diversity of our workforce has had positive social and economic repercussions that benefit all South Africans. On these fronts, a huge ‘well done’ is in order.

I’ve been told that Trevor Manuel has a bad habit. One of the risks of inviting Trevor Manuel to address your conference is that he often asks the difficult questions, he seems to like to see people squirm in their seats no matter who the audience is. And yes I do have a couple of questions for you.

Leaving institutional economics for the moment, the area of what economists call human capital formation is a key factor in explaining development and underdevelopment in the world today. The knowledge base of the population, the technology that workers are able to use, the systems around which production is organised, the innovation potential of a workforce and the means of communication between agents in the economy are all key factors that drive long run economic growth. Looking carefully at these items, are they not the issues you grapple with on a day-to-day basis?

South Africa faces an unprecedented shortage of skills. While we have about four million unemployed people, we have about a million vacancies. The reasons for this shortage include the fact that the economy is growing much faster than at any point in the past two decades. The world economy is far more skills intensive today. At the same time, the collapse of the apartheid education system in the late 1970s and probably more importantly, the poor state of schooling for all South African children from the 1960s onwards have had profound consequences on our economy and on our ability to improve living standards today. Investment in human capital takes decades to pay dividends.
To give you a sense of the skills shortages from the perspectives of employers allow me to quote from a few news reports in recent months.

According to Cisco systems in South Africa, by 2009 South Africa would be unable to fill 113 900 jobs in the information technology (IT) networking field alone. If we take advanced networking technology (internet protocol telephony, security and wireless) about 30 percent of posts or 69 700 positions would be unfilled. Alfie Hamid, the area academic manager at Cisco systems said that South Africa had 32 Information and Communications Technology (ICT) academies producing only 3 133 technicians a year, far short of what is required.

Con Fauconnier, Chief Executive of diversified miner Kumba Resources, said that his company was already experiencing a lack of artisanal skills because of South Africa’s growing economy. Fauconnier went on to say that the average age of artisans in South Africa is 54.
Martin Westcott from PE Corporate Services, a firm well known to most of you, reported on a survey conducted in the IT industry that in an 860 firm sample, the number of firms reporting staff shortages averaged about 30 percent for the past few years. This year this number has shot up to 48 percent. He also says that the number of companies who claim to pay a premium for particular skills has risen to 56 percent in 2005 from 26 percent in 1995.

The world’s fourth largest gold producer, Gold Fields, has warned that the sector is in critical need of training as skilled workers are being poached by new mines amid a commodity boom.

Ricky Douwes, Managing Director of Ability Solutions, says that Southern Africa is poised for a mini-industrial boom. He says, \”we believe that in mining, power generation and petrochemicals alone there could be a labour shortage in the region of 15 000 people\”.

A recent study by JCP International revealed that 88 percent of participating companies indicated that they face a shortage of technicians.

At a municipal level the problem is even worse. Of the 283 municipalities, 83 have no civil engineers, technologists or technicians, 46 have only one civil engineering professional and only 44 employ a civil engineering professional below the age of 35.

I could go on all day with similar reports. South Africa is experiencing its longest sustained boom in over 40 years. Our ability to broaden the scope of beneficiaries of this boom is limited by our poor human resource capacity. Many of our companies cannot take advantage of the present economic environment because they haven’t planned properly.

You, this organisation, represent a large spectrum of our HR managers. While there are many factors that explain our skills shortage, you must take some of the blame. Companies and the HR industry in particular have not been proactive enough to develop the human capacity that companies need in order to increase capacity and profitability. We are experiencing this skills crisis…on your watch.

There are companies under difficult circumstances who have continued to renew their human capacity by training, up-skilling and reorganising their production systems to take advantage of the new environment. However, too many companies sought short-term solutions. Pay more, train less has been the mantra in many sectors of the economy. This is a short-sighted approach that is now coming back to bite. Investing in people in an organisation is hard work. It requires patience, creativity and effort. And it is not cheap either. But surely the benefits outweigh the costs. Surely this is a better approach than paying a fortune for the new kid on the block only to see them leave 18 months later for even more money somewhere else.
HR managers lament the changing nature of work. They complain about the new culture where loyalty counts for nothing and where hired guns are the order of the day. We must ask ourselves, have we not contributed to this culture ourselves? What is it that we have done to contribute to this culture of short-terms evident in so many companies?

The World Economic Forum recently released the World Competitiveness Report for 2006. This report makes for interesting reading. Out of 125 countries we ranked 45, down from 40th in the last report. When it comes to South Africa, the report literally reads like a tale of two different countries. On certain issues we rank in the top 30 way ahead of many advanced countries. The report praises our corporate governance, accounting standards, judiciary, system of property rights, air transport infrastructure, macroeconomic performance, local equity market access and university/industry research collaboration.

However, in other categories we lag behind many of our competitors. In one or two areas we are as low as 121st out of 125 countries. The areas we score poorly on include the costs of crime to business, businesses’ response to HIV and AIDS, the quality of maths and science education, hiring and firing practices, pay and productivity and the availability of scientists and engineers. The report concludes that while some sectors of our economy are efficiency driven, very few sectors are innovation driven.

Again, I turn to our HR industry and ask the question, ‘what do we have to do differently to turn things around?’ How do we better position our companies to take advantage of this economic performance? At the heart of the s