A mismatch between the skills supply versus skill demand in South Africa – Why?

The South African Skills Supply and Demand Report published in 2022 

by the Department of Higher Education and Training shows

an imbalance between labour demand and labour supply within the country.

While the issuing of undergraduate degrees has increased with an average annual

growth rate of 1.2 percent, the labour market has failed to absorb these new labour

market entrants due to poor economic performance, leading to an increase in the

unemployment rate, even among those with HE and TVET qualifications.

The Construction economy has decreased by 8.7 percent per annum,

making it one of the industries experiencing the biggest skills surpluses.

The fact that this industry typically attracts a large contingent of skilled

and low-skill labour, could also potentially explain why it is experiencing a surplus.

Yet Figure 1 below, shows the intensity of shortages and surpluses per occupational

group, 2020, which leaves us with the question of how an occupational group can

have both a skills shortage and a skills surplus.To unpack this, we need to understand

what is meant by skills demand/supply and skills shortage.

Skills demand and supply

Skills demand are the skills needed for an employer to meet their objectives,

which effectively are the human resources and competencies required by

employers at prevailing wage rates to meet their needs at a given point in time. 

This is driven by globalisation, technological change, and a country’s growth

and production. With the onset of the Fourth Industrial Revolution (4IR) and

associated technologies such as cloud computing, artificial intelligence, robotics

and the Internet, focus has been given to these areas as direction for change

and growth within the country.

Skills supply refers to the skills that the labour force possesses that are made

available to the employer. This can include individuals who are currently

working (employed) or those who are willing, able and available to work

(the unemployed). Skills supply must, however, also consider skills within

the current labour force, as well as within the future labour force which

includes those individuals currently acquiring skills but who are not

currently in the labour force). 

The skills supply of a country is affected by demographic trends (number

of individuals in an age group band), labour force participation (how many

people are willing to work), and education and training trends (qualifications

being offered in education institutions). However, a skills surplus may occur

when the supply of skills in the labour force exceeds the demand for those

skills which is generally represented by high unemployment rates amongst

those individuals possessing specific skills.

Skills Shortage

Skills shortages arise when the labour available does not meet the skills

needed for an employer to meet their objectives and may also be indicative

of an inadequate number of workers in a particular occupation.

South Africa has put a significant amount of effort into promoting mathematics

and scientific skills over the last decade. Figure 2 below, shows that in terms of

the individual skills shortage, they are very low on the list.

In fact, the top listed skills shortages relate to basic skills such as reading

comprehension, active listening, speaking and writing. Also included in the

top-rated skills shortage are skills such as learning strategies, critical

thinking and active learning. 

This lack of basic skills is worrying, as mastery of these skills is usually required to

obtain more specialised skills.

The mismatch

So, when the skills demanded by employers and the skills supplied by

individuals in the labour market are not aligned, there is a mismatch.

Skills mismatches can be defined as the level of a worker’s skills relative

to the requirements of their job. This occurs when the labour force lacks one

or more of the skills required to effectively perform the required job. It may also

mean that the level of education is not in line with the requirements of the job,

due to the relevant qualification not aligning with the skills needs by employers.

This results in hard-to-fill vacancies where jobs cannot be filled due to a lack

of appropriately skilled individuals.

Looking back at Figure 1, the education system has not trained individuals on

the basic skills of comprehension and critical thinking required by those occupational

groups. This means that, although qualified in the area of their profession, they do not

have the relevant skills to meet the employer’s needs.

A way forward

The skills needed by the country are constantly evolving as the economy

changes. It is therefore vital that there is an understanding of the skills 

requirements of businesses, and postsecondary educational institutions

develop a more collaborative partnership with businesses, who are at the

forefront of experiencing changes in their industry so that they can meet the

needs of industry and produce a labour force that is employable. 

This has also been the driving force of the changes in qualifications within

the country, to ensure that redundant legacy qualifications are replaced

with more relevant qualifications to meet the needs of industry in our

current day and age. 

With greater collaboration between industry and education, we can ensure

that the skills acquired by students will be relevant in the modern labour market,

substantially increasing the chances that they will obtain a job.

In light of this, the Department of Higher Education and Training is doing a

survey on occupations in high demand. This survey, to be completed by individuals

in industry, will help shape the education landscape and the future workforce of our

country. Please consider completing the survey by clicking on the link below.

DHET Survey - Occupations in high demand 

Heidi Kilian

Head: Training Academy

References

Labour Market Intelligence research programme. (2022). Skills Supply and Demand in South Africa [online]. Available from:  https://www.dhet.gov.za/Planning%20Monitoring%20and%20Evaluation%20Coordination/Report%20on%20Skills%20Supply%20and%20Demand%20in%20South%20Africa%20-%202022%20%281%29.pdf [Accessed: 14 March, 2023]