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CONSTRUCTIONMONITOR
Employment Q3 • 2018
CIDB CONSTRUCTION MONITOR - EMPLOYMENT; OCTOBER 2018
CIDB CONSTRUCTION MONITOR - EMPLOYMENT; OCTOBER 2018 1. Introduction _________________________________________________________________ 1 2. Employment in the Construction Industry; Overview ________________________________ 2
2.1 Context _______________________________________________________________ 2 2.2 Employment in the Construction Industry (Formal Sector) _______________________ 2 2.3 Employment by Industry Sector ____________________________________________ 4 2.4 Employment Index; Contractors ___________________________________________ 7 2.5 Employment in the Consulting Engineering Sector ____________________________ 8 2.6 Employment Forecasts ___________________________________________________ 9 2.7 Underspending by Government Results in Lost Employment Opportunities _________ 9 2.8 Expanded Public Works Programme (EPWP) ________________________________ 10
3. Construction Employment; Provincial Overview ___________________________________ 12 4. Composition of Construction Labour Force ______________________________________ 15
4.1 Composition by Gender ________________________________________________ 15 4.2 Youth Employment _____________________________________________________ 15 4.3 Composition by Skills Profile _____________________________________________ 16 4.4 Skills Shortages; Contractors ____________________________________________ 16 4.4 Skills Shortages; Consulting Engineers _____________________________________ 17
5. Industrial Action and Site Stability ______________________________________________ 19 5.1 Industrial Action _______________________________________________________ 19 5.2 Site Stability __________________________________________________________ 19
1
CIDB CONSTRUCTION MONITOR - EMPLOYMENT; OCTOBER 2018
1. Introduction
The cidb Quarterly Monitors focus on the following themes per quarter: • Quarter 1: Supply & Demand; • Quarter 2: Contractor Development; • Quarter 3: Employment; and • Quarter 4: Transformation. This cidb Construction Monitor – Employment (Quarter 3) examines employment in the construction industry and the factors affecting employment. Details of employment are obtained from the Quarterly Labour Force Survey1, the Quarterly Employment Statistics2, the cidb SME Business Confidence Survey3 and the Consulting Engineers South Africa (CESA) Bi-Annual Economic and Capacity Survey report4. The employment data includes details of formal and informal construction employment, as well as employment at the national and provincial levels.
1 StatsSA (2018). Quarterly Labour Force Survey; August 2018, Publication P0211. Statistic South Africa,
www.statssa.gov.za 2 StatsSA (2018). Quarterly Employment Statistics (QES); September 2018, Publication P0277. Statistic South Africa,
www.statssa.gov.za 3 cidb (2018). cidb SME Business Conditions Survey, Quarter 3 2018, Construction Industry Development Board,
www.cidb .org.za 4 CESA (2017). Biannual Economic and Capacity Survey; July – December 2017. Consulting Engineers South Africa.
www.cesa.co.za
2
2. Employment in the Construction Industry; Overview
2.1 Context
South Africa has a challenge of high unemployment and skills shortages, at the end of 2018Q2, the unemployment rate was 27,2%5, and one of main goals that South Africa has set itself in the National Development Plan is to cut the unemployment rate to 6% by 20306. South Africa has an abundance of low and unskilled labour, a profile of the unemployed presented by Statistics South Africa shows that the unemployment rate is higher amongst the following groups; the youth, individuals that did not complete their secondary education, individuals that completed matric over the period 2009 and 2017, and those without experience. The construction industry is an important player in job creation, not only in the construction sector but in other sectors of the economy. The construction industry uses a wide range of inputs (such as construction materials) from many other industries to produce its goods and services7, and as a result the construction industry also contributes indirectly to the jobs that are created across a number of sectors. Sectors that benefit from construction output include manufacturing, mining, transportation, real estate and business services. According to Stats SA8, total employment in South Africa has risen from 14,6 million to 16,3 million between the period 2009 to 2018 and the construction industry is one of the eight industries that has contributed to this increase by creating 255 000 jobs over this period. However, the increase in employment in the construction and other industries has not been enough to accommodate the new entrants in the labour force over this period, unemployment has been increasing at a higher rate than employment
2.2 Employment in the Construction Industry (Formal Sector)
According to the Quarterly Employment Statistics (QES)9, at the end of 2018Q1 the construction industry employed around 609 000 people in the formal sector, with civil engineering contributing to the bulk of the employment 369 000 (60%) and building contributing around 209 271 (34%), the rest of the employment was for site preparation (1%) and renting of construction equipment with operators (4%). The Quarterly Employment Statistics data indicates that the sector has created around 170 000 jobs in the formal sector between 2009 and 2017, 93 000 were created in the civil sector and 76 000 were created in the building sector. However, the effect of the downturn in the industry and lack of demand in the sector are illustrated by the decline in employment or job losses that have occurred in the sector, even though it’s at a lower rate than expected. At the end of 2018Q1, Stats SA Quarterly Employment Statistics figures showed that construction employment declined by -3% year-on-year, -4% in civil/construction works and -2% in building. Trends in infrastructure investment (GFCF) and total formal employment are illustrated in the following figure in which GFCF is shown in real terms (2010 Rands), together with the total formal employment obtained from the Quarterly Employment Statistics. It is seen that the total construction works spend in 2017 amounted to about R299 billion in 2010 Rands (or R436 billion in nominal Rands), and as at 2017Q4 the sector employed 361 000 in civil/construction works, 205 000 in building (building installation and completion) and a further 31 000 in site preparation and rental of construction equipment (i.e. total employment of 597 000 people). The South African economy is currently in a technical recession, it contracted by 2% and 0.7% quarter-on-quarter in 2018Q1 and 2018Q2. The Stats SA GDP statistics showed that the construction industry has had five consecutive quarters of negative growth from 2017Q1 to 2018Q1. However, there were positive news in
5 StatsSA (2018). Quarterly Labour Force Survey; August 2018, Publication P0211. Statistics South Africa,
www.statssa.gov.za 6 The Presidency (2012). National Development Plan 2030: Our future – Make it Work. National Planning
Commission, nationalplanningcommission.wordpress.com 7 UK Contractors Group (2009). Construction in the UK Economy: The Benefits of Investment, www.ukcg.org.uk 8 StatsSA (2016). Labour Market Dynamics in South Africa, 2015. Statistics South Africa, www.statssa.gov.za 9 StatsSA (2018). Quarterly Employment Statistics; September 2018, Publication P0277. Statistics South Africa,
www.statssa.gvo.za
3
2018Q2 when the sector grew by 2.3%. This long term deficiency in economic activity has resulted in decline in construction employment10
Gross Fixed Capital Formation in Construction and Formal Employment (QES)
Investment in Construction/Civil and Formal Employment in Civil (QES)
10 StatsSA (2018). Gross Domestic Product; September 2018, Publication P0441. Statistics South Africa,
www.statssa.gov.za
0
100
200
300
400
500
600
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
Empl
oym
ent (
*1 0
00)
Gro
ss F
ixed
Cap
ital F
orm
atio
n(2
010:
R m
illio
n)GFCF: Construction-Total Employment: Building Employment: Civil
0
50
100
150
200
250
300
350
400
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
Empl
oym
ent (
*1 0
00)
Gro
ss F
ixed
Cap
ital F
orm
atio
n(2
010:
R m
illio
n)
Construction / Civil Employment: Construction / Civil
4
Investment in Building (Residential and Non-Residential) and Formal Employment in Building (QES)
A close correlation between GFCF and employment is observed in the above figures.
2.3 Employment by Industry Sector
Data from the Quarterly Labour Force Survey (QLFS) shows that the formal sector (excluding agriculture and private households) employs around 11,3 million people, of which the construction sector accounts for 11% of total employment. The informal sector employs around 2,8 million people, the largest contributor of jobs in the informal sector are trade (38%), community and social services (18%) and construction (17%). In the construction industry, based on the Quarterly Labour Force Survey data, formal employment accounts for 67%, while informal employment accounts for 33% of total construction employment. The contribution of the construction sector to informal employment is significant, at the end of 2018Q2 around 493 000 people were employed.
Total Formal and Informal Employment by Industry Sector
0
50
100
150
200
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
Empl
oym
ent (
*1 0
00)
Gro
ss F
ixed
Cap
ital F
orm
atio
n(2
010:
R m
illio
n)
Total: Building Employment: Building
Mining3% Manufacturing
12%
Utilities1%
Construction11%
Trade23%
Transport7%
Finance17%
Community and social services
26%
5
Informal Employment by Industry Sector (excluding agriculture)
For the 2nd Quarter of 2018, 90 000 jobs were lost quarter-on-quarter, the biggest job losses occurred in the manufacturing industry (-105 000), other industries that contributed to the job losses are as follows; community services (-93 000) and trade (-57 000). The industries that had job gains are as follows; transport (54 000), construction (45 000), mining (38 000), private households (22 000) and utilities (18 000). The year-on-year growth in the construction industry’s informal employment is shown in the following figure. Although significant fluctuations are seen on a year-on-year basis, overall there has been a significant growth in informal employment in the construction industry between 2009 and 2017, the huge gains in the last two quarters can also be seen from the figure below. The construction informal sector accounts for around 17% of total informal employment. Over the long term, the contribution of the construction sector to informal sector jobs has grown significantly, in 2008Q4 informal sector jobs in construction were 342 000 and at the end of 2018Q2 there were 493 000 people employed in informal sector – an increase of 151 000 jobs or 44% in the construction industry informal sector. In the shorter term, the construction informal sector contributed 493 000 jobs in 2018Q2. There was a significant increase of 64 000 or 15% in the number of jobs created year-on-year from 2017Q2 to 2018Q2, this was the largest employment gains in the informal sector. The sharp increase in the informal sector could also be because of people who might have lost their jobs in the formal sector moving to the informal sector, the sector is becoming a cushion for them. However, it should be noted that when people move into the informal sector, they do not receive the same level of income and benefits that they received in the formal sector. The expansion of the construction informal sector is not unique to South Africa, and the following conditions have led to the expansion of the informal sector elsewhere in the world; rapid urbanisation combined with low economic growth has increased the number of people unable to access formal jobs, increased competition for work, declining demand and restrictive employment regulations that have led registered contractors to shed permanent employees and replace them with temporary or casual workers11
11 CIB (2012). New perspectives on construction in developing countries. International Council for Research and Innovation in Building and Construction. www.cibworld.nl
Manufacturing8%
Construction17%
Trade38%
Transport10%
Finance9%
Community and social services
18%
6
Year-on-year Growth in Informal Employment
Year-on-year-Growth in Construction Employment Construction informal employment has grown at a higher rate compared to formal employment, the average growth rate for informal and formal employment from 2010Q1 to 2018Q2 is 4% and 1% respectively. The informal sector includes the self-employed in micro-businesses that are not registered for income tax or VAT registered, employees with regular employment in formal or informal enterprises who do not receive benefits such as medical aid and pension funds, those that do not contribute to UIF and who do not have written employment contracts, short term employees and casual employees. In the construction industry, the majority of the informal self-employed could be mostly micro and small enterprises registered in Grade 1 and 2 contractors. The informal self-employed are predominantly in rural provinces such as Limpopo, Mpumalanga and the Eastern Cape as well as urban provinces such as Gauteng and KwaZulu Natal in which the
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
2010Q2 2011Q2 2012Q2 2013Q2 2014Q2 2015Q2 2016Q2 2017Q2 2018Q2
Year
-on-
Year
Gro
wth
in E
mpl
oym
ent (
%)
Total: Informal Construction: Informal
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
2010Q2 2011Q2 2012Q2 2013Q2 2014Q2 2015Q2 2016Q2 2017Q2 2018Q2
Year
-on-
Year
Gro
wth
in E
mpl
oym
ent (
%)
Construction: Formal Construction: Informal
7
construction or major repairs to own houses is high12. High informal employment in these provinces is also attributed to the following; • the high unemployment rate in these provinces, the individuals located in these provinces may not have
the experience and skills to be absorbed by the formal enterprises therefore people have to find alternative means other than formal employment to generate an income and to gain experience; and
• informal sector construction activities such as individuals building, maintaining and repairing their own houses is common in these areas.
The informal sector is lower in the Western Cape which has the lowest unemployment rate (23,2%), it also has the lowest number of construction or major repairs to own houses in comparison to other provinces. Of interest, the Register of Contractors also reflects that there are much more Grade 1 and 2 contractors registered in the five above mentioned provinces than in the Western Cape. The informal sector enterprises comprises mostly of subcontractors and labour only contractors, some of these businesses have linkages with enterprises in the formal sector through subcontracting and providing labour-only services. In terms of skill requirements, the subcontractors and labour only contractors that perform common tasks in the informal sector utilises mostly low skilled and unskilled labourers.
2.4 Employment Index; Contractors
The cidb SME Employment Index13 and activity Index obtained from surveying Grades 3 to 8 cidb registered contractors is shown below. The QLFS and the QES both show a decline in formal construction employment, this is supported by the cidb SME Eployment Index which shows a negative net balance – i.e. more contracting enterprises surveyed indicated that they are reducing staff than employing staff. For General Building (GB) the employment index was at it’s lowest level of (-50) in 2017Q3 activity was also at its lowest level in the same period (-55), for Civil Engineering (CE) it was at it’s lowest level of (-45) in 2017Q4, activity was also at its lowest level (-55), there has been a slight improvements during the recent quarters. Construction workers get laid off due to a decline in construction activity, the deficiency of demand for their services has created job losses. The rate of labour shedding has been increasing for both General Building (GB) and Civil Engineering (CE) contractors, this correlates with construction activity which has been declining.
Employment Index (Net Balance) and construction activity: cidb Registered Contractors (Grades 3 to 8)
12 StatsSA (2018). Quarterly Labour Force Survey; August 2018, Publication P0211. Statistics South Africa, www.statssa.gov.za 13 cidb (2017). cidb SME Business Condition Survey; Quarter 3. Construction Industry Development Board, October
2017. www.cidb.org.za
-60
-50
-40
-30
-20
-10
0
Empl
oym
ent I
ndex
(Net
Bal
ance
)
GB: Growth in employment CE: Growth in employmentGB: Growth in activity CE: Growth in activity
8
2.5 Employment in the Consulting Engineering Sector
The provision of professional services such as planning, architecture and design, quantity surveying, project planning and management are part of the construction industry value chain. Occupations in the consulting engineering sector include managers, professionals, technicians and associate professionals and clerical support workers. The Stats SA Quarterly Employment Statistics reports on employment in the consulting engineering sector under real estate and business services. As illustrated below, as at 2018Q1 around 93 887 people were employed in the sector. On a year-on-year basis, 2 000 or 2% jobs were gained in the consulting sector. Between 2009Q4 and 2017Q4 the sector added 25 000 jobs or employment grew by 36%. The average annual growth rate for the consulting sector from 2009Q4 to 2017Q4 is 4%.
Employment of Consultants (QES) vs. GFCF
The Consulting Engineers South Africa (CESA) currently reflects the majority of the larger consulting enterprises, but many small and micro-enterprises are not members of CESA. As illustrated below, CESA members currently employ around 21 369 people14. On a year-on-year basis, 1 980 or (-8%) jobs were shed by CESA members from 2016Q4 to 2017Q4.
14 CESA (2017). Bi-Annual Economic and Capacity Survey July - December 2016, at 2016Q4. Consulting Engineers
South Africa. www.cesa.co.za
0
20
40
60
80
100
120
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
Empl
oyen
t, Fo
rmal
(*1
000)
Gro
ss F
ixed
Cap
ital F
orm
atio
n(2
010:
R m
illio
n)
GFCF Employment
9
Employment by Members of CESA vs. GFCF
The correlation between employment in the consulting sector and GFCF is seen in the figures above.
2.6 Employment Forecasts
The close correlation between GFCF and employment in the contracting and the professional services sectors has been highlighted in Sections 2.2 and 2.6. During the year 2013 to 2016, the construction sector experienced positive growth and the sector also experienced job gains. In 2017 the construction sector experienced negative growth, this also had an impact on the sector’s employment, the sector experienced job losses of (-3%). Of concern is that most economic projections forecast a decline in real terms in GFCF over the short to medium term15 – which will result in more job losses over this period. GFCF; Rand (Million) 2010 2013 2014 2015 2016 2017 2018f 2019f 2020f
Construction-Total 279 583
292 678
303 918
305 529
299 174
292 894
291 492
292 499
% change 7,9% 4,7% 3,8% 0,5% -2.1% -2.1% -0,5% 0,3%
Building 107 721
116 595
118 268
113 151
110 372
110 700
112 941
116 628
% change 2,6% 8,2% 1,4% -4.3% -2,5% 0,3% 2,0% 3,3% Residential-Building 51 114 55 771 58 801 56 402 57 260 58 119 59 572 61 657
% change 4,2% 9,1% 5,4% -4.1% 1,5% 1,5% 2,5% 3,5% Non-residential Building 56 607 60 824 59 467 56 749 53 112 52 581 53 370 54 971
% change 1,3% 7,4% -2.2% -4.6% -6.4% -1.0% 1,5% 3,0%
Construction Works 171 862
176 083
185 650
192 378
188 802
182 194
178 550
175 872
% change 11,5% 2,5% 5,4% 3,6% -1.9% -3.5% -2.0% -1.5%
2.7 Underspending by Government Results in Lost Employment Opportunities
An analysis of municipal and provincial capital expenditure for South Africa is given below16, in which the variance against phased linear capital budget is shown for provincial departments and municipalities.
15 Industry Insight (2017). 2017 Full Review and Forecast. Industry Insight Focus Forum, 11 October 2017.
www.industryinsight.co.za 16 cidb (2018). cidb Construction Monitor – Supply and Demand; April 2018. Construction Industry Development
Board. www.cidb.org.za
0
5
10
15
20
25
30
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
Empl
oyen
t, Fo
rmal
(*1
000)
Gro
ss F
ixed
Cap
ital F
orm
atio
n(2
010:
R m
illio
n)
GFCF Employment
10
Variance against Capital Budget; Municipalities and Provincial Departments From the analysis of the municipal and provincial expenditure, it can be seen that • as at the end of the 2017/18 provincial financial year (2018Q1), the total underspend by provincial
departments against linear phased budget amounted to around R 1,5 billion; • at the end of the 2017/18 municipal financial year (2018Q2), the total underspend by municipalities
against linear phased budget amounted to around R13 billion17 In total, municipalities and provincial departments under spend by around R14.5 billion per year, municipalities were the main contributors to the underspending, this results in significant lost employment opportunities. The contruction industry has been experiencing high lack of demand, underspending also contributes to the lack of demand in the industry.
2.8 Expanded Public Works Programme (EPWP)
The Expanded Public Works Programme (EPWP) was launched in 2004 as one of the policies aimed to reduce unemployment, with a specific focus on women and the youth. The EPWP programme is also aimed at equipping unemployed youth with skills and experience needed in the labour market, according to Stats SA a higher percentage of individuals without matric (65,6%) and with matric (23,6%) participate in government job creation programmes such as EPWP, only 10,5% of people with tertiary education participated on these programmes in 201518. The EPWP currently operates in four sectors, namely infrastructure, environment, culture and social and non-state (non-profit organisations and community work). Within the infrastructure sector, work opportunities are created largely through increasing the labour intensity of government funded infrastructure projects. A work opportunity in infrastructure has an average period of four (4) months. The key EPWP infrastructure programmes include; Vuk’uphile, National Youth Service, Large Projects (projects with a minimum budget of R30m or more) and Provincial Roads. It is seen from the table below that for the current financial year 2017/18, EPWP has created around 547 000 job opportunities in the infrastructure sector19. At the end of 2017Q3 there was an increase of 11% on a year-on-year basis in the number of job opportunities created by the EPWP programme in the construction industry.
17 NT (2017) Section 71 Information (In-year Management, Monitoring and Reporting): 2016/17, 4th Quarter. National
Treasury. www.mfma.treasury.gov.za 18 StatsSA (2016). Labour Market Dynamics in South Africa, 2015. Statistics South Africa, www.statssa.gov.za 19 DPW (2017). Expanded Public Works Programme Quarterly Report. Department of Public Works. www.epwp.gov.za
-25 000
-20 000
-15 000
-10 000
-5 000
0
5 000
Varia
nce
Agai
nst B
udge
t (R
*100
0)
Municipalities Provincial Departments
11
EPWP Work Opportunities in the Infrastructure Sector
Year Quarter Number of
Work Opportunities
Youth %
Women %
People with
Disabilities %
Year on Year
Change
2015-16
Q1 8,650 62.03% 21.55% 1.36% Q2 78,098 36.34% 64.36% 0.73% Q3 149,446 35.33% 62.50% 0.88% Q4 202,481 39.46% 58.86% 0.93%
2016-17
Q1 94,915 32.70% 67.86% 0.96% 997% Q2 165,607 37,14% 63.52% 0.74% 112% Q3 199,196 39,13% 60.48% 0.69% 33% Q4 263,510 42.33% 56.25% 0.64% 30%
2017-18 Q1 136,327 30.45% 71.80% 1.21% 44% Q2 189,648 37.25% 59.81% 0.56% 15% Q3 220,873 39.48% 57.76% 0.57% 11%
EPWP Job Opportunities in Infrastructure Sector
0
50,000
100,000
150,000
200,000
250,000
300,000
EPW
P Jo
b O
ppor
tuni
ties:
Infr
astr
uctu
re S
ecto
r
12
3. Construction Employment; Provincial Overview
A breakdown of formal and informal employment by province obtained from the StatsSA Quarterly Labour Force Survey (QLFS) is given in the table below.
Provincial contribution to construction employment (*1000) yyyyqq SA EC GP KZ WC NC FS MP LP NW
2018Q2 1476 163 419 229 233 24 51 112 150 94 2018Q1 2017Q4
1431 1390
154 146
419 369
211 196
214 227
26 26
59 75
105 107
146 154
96 90
2017Q3 1365 157 340 199 231 21 73 118 156 71 2017Q2 1395 139 387 235 229 24 61 105 131 84 2017Q1 2016Q4
1505 1483
168 185
452 402
228 228
228 237
26 22
56 54
112 113
150 170
87 72
2016Q3 1491 180 405 203 242 31 55 130 167 79 According to Stats SA the provincial unemployment rate currently as follows; the urban provinces unemployment rate range between 21% and 33%, the Western Cape urban provinces have lower unemployment rate of 21%, whilst Gauteng urban metro’s have the highest unemployment rate, 33% in Ekurhuleni. The rural provinces are also experiencing high unemployment, their unemployment rate ranges between 19% and 33% and they have been increasing. Of the nine provinces in South Africa, four provinces stand out in terms of their contribution to employment, namely Eastern Cape, Gauteng, KwaZulu Natal and Western Cape which collectively account for around 71% of total formal and informal construction employment. Of these, Gauteng alone accounts for close to 28% of total construction employment.
Overview of Construction Spend, 2017Q3 to 2018Q2
13
Provincial contribution to construction employment (%) yyyyqq SA EC GP KZ WC NC FS MP LP NW
2018Q2 100% 11% 28% 16% 16% 2% 3% 8% 10% 6% 2018Q1 2017Q4
100% 100%
11% 10%
29% 27%
15% 14%
15% 16%
2% 2%
4% 5%
7% 8%
10% 11%
7% 6%
2017Q3 100% 11% 25% 15% 17% 2% 5% 9% 11% 5% 2017Q2 2017Q1
100% 100%
10% 11%
28% 30%
17% 15%
16% 15%
2% 2%
4% 4%
8% 7%
9% 10%
6% 6%
2016Q4 100% 12% 27% 15% 16% 1% 4% 8% 11% 5% 2016Q3 100% 12% 27% 14% 16% 2% 4% 9% 11% 5%
The dominance of Eastern Cape, Gauteng, KwaZulu Natal and Western Cape in terms of construction employment is a direct reflection of the construction spend by province shown below20.
Construction Spend by Province - % (2017Q3 - 2018Q2) Estimates: Industry Insight Database Province Building Civil Total KwaZulu-Natal 19% 28% 23% Gauteng 35% 11% 23% Western Cape 18% 13% 16% Eastern Cape 13% 13% 13% Limpopo 5% 14% 9% Mpumalanga 4% 7% 5% North West 2% 7% 5% Free State 3% 5% 4% Northern Cape 1% 2% 2% Total 100% 100% 100%
Quarterly gains and losses in total informal and formal employment by province is given in the table below.
Quarter-on-quarter gains/losses in construction employment (*1000) yyyyqq SA EC GP KZ WC NC FS MP LP NW
2018Q2 45 10 1 18 18 -2 -8 7 3 -2 2018Q1 2017Q4
40 26
8 -11
49 30
15 -3
-12 -4
0 5
-16 2
-2 -11
-8 -1
6 20
2017Q3 -30 18 -47 -36 2 -3 12 13 25 -13 Total 80 24 32 -6 4 0 -10 7 19 10
2017Q2 2017Q1
-110 23
-29 -17
-65 50
7 0
1 -9
-2 4
5 2
-7 -1
-19 -20
-3 15
2016Q4 -8 5 -3 25 -5 -9 -1 -17 3 -7 2016Q3 103 30 22 -15 31 -3 -1 19 19 2
Total 7 -11 4 17 18 -10 5 -6 -17 7 At the end of 2018Q2, 1 476 000 people were employed in the construction industry. In 2018Q2 the construction industry contributed to job gains in the economy, increasing by 45 000 jobs quarter-on-quarter, 43 000 in the formal sector and 2 000 in the informal sector. Construction employment increased by 3% quarter-on-quarter and there was also a year-on-year increase of 6%. The quarter-on-quarter increase in employment was due to larger increases in Western Cape, KwaZulu Natal and Eastern Cape of 9% (18 000), 8% (18 000) and 6% (10 000) respectively, the other provinces, Mpumalanga, Limpopo and Gauteng reported marginal increases. There were substantial job decreases in construction employment that were reported in Free State (-8 000) 13% and Northern Cape (-2 000) 9% while the North West (- 2 000) -2% reported marginal decreases. On a year-on-year basis, 80 000 jobs were added to construction employment, 17 000 in the formal sector and 64 000 in the informal sector. The provinces that reported the largest increases were Gauteng, Eastern Cape and Limpopo, 8% (32 000) and 17% (24 000) and 14% (19 000) respectively whilst Free State reported substantial job declines of -16% (-10 000). Details of employment for
20 Industry Insight (2018). Investment Map Monitor. Industry Insight, October 2018, www.industryinsight.co.za
14
the provinces with the major contributions to construction employment in South Africa are shown in the following graphs.
Construction Employment; South Africa (2015Q3 to 2018Q2)
Construction Employment; Eastern Cape Construction Employment; Gauteng
Construction Employment; KwaZulu-Natal Construction Employment; Western Cape
500
700
900
1 100
1 300
1 500
1 700
2018
02
2017
02
2016
02
Informal Formal
0
50
100
150
200
2018
02
2017
02
2016
02
Total (*1 000)
0
50
100
150
200
250
300
350
400
450
500
2018
02
2017
02
2016
02
Total (*1 000)
0
50
100
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200
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300
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02
2017
02
2016
02
Total (*1 000)
0
50
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200
250
300
2018
02
2017
02
2016
02
Total (*1 000)
15
4. Composition of Construction Labour Force
4.1 Composition by Gender
According to Stats SA, the unemployment rate is higher amongst females (28,8%) compared to males (25.1%). The labour absorption rate is higher for males (49.1%) as compared to females (37.9%). The construction industry currently employs around 1 431 million people, of which 89% are male and 11% female21. In comparison with other industries, the construction industry has the highest proportion of male employment. The employment of women in the construction industry has increased by around 44% (from 109 000 to 157 000) from 2008Q1 to 2018Q2. On a year-on-year basis, the number of females employed in the industry decreased by 17 000, but there was a minor increase of 8 000 on a quarter-on-quarter basis for 2018Q2. Male representation in the construction industry is high (89%) compared with the industry average of 56% for all industries. Trends in the employment by gender are given below. These trends show that in times of downturns, females appear to be at the forefront of job losses, for instance after 2017Q1 job losses by females have been at a much higher rate than job losses by males, 2018Q1 (-25% Females; -2% Males) 2018Q2 (-10% Females; 8% Males). The breakdown in the composition in employment by gender has remained reasonably consistent over the past 8 years or so, namely around 89% male and 11% female.
Composition of Construction Employment by Gender
Male domination is also prevalent in the consulting engineering sector, 68% of the employees are male while 32% are female.
4.2 Youth Employment South Africa’s youth unemployment rate currently stands at 53,7% for young people who are between 15 to 24 years and 33,6% for young people between 25 to 34 years.. The labour absorption rate for the age group between 15 to 24 years is only 11,6% and 49% for young people between 25 to 34 years. The main reason for the low absorption rate among the younger age group is the absence of work experience because they are new entrants to the labour market. As at 2018Q2 6,1 million young people were employed in South Africa, of which the trade, community services, finance and manufacturing sectors account for the largest employment of youth. At the end of 2018Q2 the construction industry accounted for around 10% of the youth employed or 612 000 young people. At the end of 2018Q2, the construction industry added 11% jobs or employed 61 000 more young people on a year-on-year basis. It should also be noted that due to lack of skills and 21 StatsSA (2017). Quarterly Labour Force Survey; August 2017, Publication P0211. Statistic South Africa,
www.statssa.gov.za
50
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1,400
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oym
ent;
Fem
ale
(*1
000)
Empl
oym
ent;
Mal
e (*
1 00
0)
Male Female
16
experience most of the youth is mainly employed in the low skilled occupations such as elementary occupations.
Distribution of Employed Youth by industry
4.3 Composition by Skills Profile
An estimate breakdown of the labour force profile in the contracting sector is given below, obtained from the 2017 Workplace Skills Plan submissions and the CETA database22.
Occupational Major Group % of Total Managers 9% Professionals 8% Technicians and Associate Professionals 11% Clerical Support Workers 6% Service and Sales Workers 2% Trade Workers 14% Plant and Machine Operators and Assemblers 13% Elementary Occupations 37%
It is seen that the semi-, low and unskilled occupations of trade workers, plant and machine operators and assemblers, and elementary occupation account for around 70% of the total construction workforce and only around 28% account for the skilled workers such as managers, professionals, technicians and associate professionals. Of interest is that the construction worker skills profile aligns with the median skills profile of the country, namely 46% of the workforce is semi-skilled and 29% of the workforce is low- and un-skilled.
4.4 Skills Shortages; Contractors
Contractors report that access to skilled labour is becoming a significant constraint to business growth. This is illustrated below where the constraints of access for work and access to skills are compared (weighted index) for General Building (GB) and Civil Engineering (CE) classes of work23
22 CETA (2017). Sector Skills Plan: 2017 to 2022. Construction Education and Training Authority, Pretoria. 23 cidb (2017). cidb SME Business Conditions Survey, Quarter 3 2017, Construction Industry Development Board,
www.cidb .org.za
1.0%
2.3%
6.2%
5.1%
5.7%
10.1%
11.1%
16.1%
18.5%
24.0%
0.5%
2.1%
5.7%
6.7%
5.3%
9.5%
12.9%
15.1%
16.0%
26.3%
0% 10% 20% 30%
Utilities
Mining
Transport
Private Households
Agriculture
Construction
Manufacturing
Finance
Community and Social Services
Trade
2010Q2 2018Q2
17
Constraints to Growth of Contractors; Access to Work and Skills Note that the shortage of skills is also driving up the cost of labour, resulting in decreased profit margins for small and medium contractors. Small and medium sized emerging contractors are likely to be bearing the brunt of these skills shortages, and are least able to attract and train skilled labour. According to Stats SA, unemployment rates are higher amongst individuals with less than matric (31,9%) and matric (28,3%) relative to graduates (6,9%), and it is also reported that long term unemployment occurs more amongst those individuals without experience24. South Africa has an abundance of low and unskilled labour, there is a gap between the skills that the population has and the skills that the economy needs, this is also reflected by the high labour absorption rate for the individuals with tertiary education (81,5%), they are more likely to be absorbed or employed in the economy. Compared to other sectors such as finance and business services, construction is one of the sectors which is most intensive in unskilled and low skilled labour, therefore it is one of the sectors that should be absorbing the high number of low and unskilled unemployed individuals. Unfortunately the low growth and decline in the sector has impacted the sector’s ability to create jobs. Access to skilled labour is a constraint for the growth of small and medium contractors, but it is currently not a significant constraint as it was in 2008 when the construction industry was at its peak. Rather, contractors are currently experiencing that access to work is the most significant constraint to their growth.
4.4 Skills Shortages; Consulting Engineers According to Consulting Engineers South Africa (CESA) the CESA member organisations are reporting that they are experiencing difficulties in their recruitment for engineers and technical occupations25. This correlates with the career junction index which reflects that in the architecture and engineering sector, supply is less than demand. The percentage of firms experiencing difficulties in recruiting engineers has decreased significantly from 74% in 2015Q2 to around 44% in 2016Q2, as shown below.
24 StatsSA (2017). Quarterly Labour Force Survey; August 2017, Publication P0211. Statistic South Africa,
www.statssa.gov.za 25 CESA (2017). Biannual Economic and Capacity Survey; July – December 2016 Consulting Engineers South Africa.
www.cesa.co.za
0
10
20
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60
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80
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100
2010
Q2
2011
Q2
2012
Q2
2013
Q2
2014
Q2
2015
Q2
2016
Q2
2017
Q2
2018
Q2
Con
stra
int t
o B
usie
ss G
row
th(W
eigh
ted
Inde
x %
)
GB; Access to Skills CE; Access to SkillsGB; Access to Work CE; Access to Work
18
CESA Members Experiencing Shortages of Engineers
0
10
20
30
40
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60
70
80
90
100
% C
onsu
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s R
epor
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Shor
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of E
ngin
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19
5. Industrial Action and Site Stability
5.1 Industrial Action
The largest number of worker days lost is associated with protected strikes26. Legal, union initiated strikes are usually more protracted leading to significant production delays due to the number of man-days lost. According to the 2017 Annual Industrial Action Report (the most recent report available), the construction industry especially in comparison with other industry, was not highly impacted by industrial action. The construction industry lost 5 237 working days due to strikes in 2017, on a year-on-year basis this represented a -67% decline in the number of days lost compared to 201627.
Working days lost by construction industry
5.2 Site Stability
A serious threat that is growing in intensity and geographic presence is the occurrence of community gangs and Business Forums forcefully demanding a stake in construction projects. The demands by Business Forums arises, at least in part, due to misinterpretation (intentional or otherwise) or abuse of the 30% sub-contracting provision in the Preferential Procurement (PP) Regulations (2017). This site intimidation has stalled the progress of, or halted, several projects around the country – and impacting on government clients and contractors appointed to undertake the construction works. In KwaZulu-Natal alone, it is reported that over 30 court interdicts have been issued against multiple Business Forums28. Of significance to note is that upfront social facilitation during the project feasibility and planning phase is an important component in reducing site instability during construction. Such social facilitation can be achieved through the Guidelines for Community Participation provided within the cidb Standard for Contract Participation Goals. The cidb is monitoring the situation closely.
26 cidb (2015) Labour and Work Conditions in the South African Construction Industry, Construction Industry
Development Board. www.cidb.org.za 27 DoL (2017) Industrial Action Report 2017. Department of Labour. www.labour.gov.za 28 After Cox Yeats Attorneys
0
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100,000
150,000
200,000
250,000
300,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Day
s Lo
st
20
Notes
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