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2014: a tough year for jobs

Martin Czernowalow
By Martin Czernowalow, Contributor.
Johannesburg, 10 Dec 2014
Job cuts are expected to resume within the ICT sector from the first quarter of next year.
Job cuts are expected to resume within the ICT sector from the first quarter of next year.

This year is unlikely to be remembered fondly by the hundreds of ICT workers who lost their jobs in the sector, but labour unions and analysts say the worst is not over yet, and the industry should brace itself for further retrenchments next year.

In total, it is estimated about 2 800 people have been affected by labour-related issues in 2014 - while not all of them may have lost their jobs, some have had to reapply for positions under new company structures, and yet others have had to take on different responsibilities as their job specifications have been altered.

Marius Croucamp, Solidarity trade union's head of the communication sector, says 2014 has been a very tough year in terms of downsizing, and warns workers should brace themselves for more job losses in the first quarter of next year.

"The factors that are affecting the job market are mostly economic, but globalisation also plays a huge role," Croucamp says, adding that politics within the workplace cannot be ignored either.

"For companies operating in SA, there is some very onerous legislation that has to be complied with. This means that it is becoming very costly to business, and not only within the ICT sector."

However, Croucamp notes the ICT industry was previously earmarked as a job creation sector, but the opposite is happening. "This is a terrible time for the sector, especially as it was a job creation area earmarked by government recently. It has been anything but."

Downward trend

Ovum senior analyst Richard Hurst says it is concerning that the sector is in a steady state of decline. "Perhaps this hasn't been the worst year ever, but we've seen large-scale job losses in 2008, and then again some negative movement in 2009 - so it seems that we are on a continuous decline.

"We are not alone, though. The US and Europe are experiencing similar trends and challenges," Hurst says, adding the sector would need a disruptive development to reverse this trend. This, he says, would require government intervention, which needs to create an environment that will facilitate job creation and expansion within the sector.

"For instance, government should have freed up spectrum years ago, which would have created various opportunities within the industry. It is now becoming laughable," he says.

However, Hurst says he does not foresee any radical changes in the near future, and also predicts the first quarter of next year will be a hard time for jobs within the ICT sector. "People ask where the bright spots are, but unfortunately, I just don't see any right now."

Harsh year

BMI-TechKnowledge analyst Brian Neilson says this year has been the worst for some time in terms of jobs in the ICT sector. He points out local players are finding themselves in a maturing market, where voice revenue growth has all but been wiped out, while data revenue growth is also difficult to sustain.

"In addition to the general maturation trend within the ICT sector, there are small, simple players coming up that are creating competition. While this is spurring some movement of staff from old companies to new ones, there simply isn't enough job creation to absorb all workers within the sector."

Neilson points out globalisation is also a trend that is having a significant impact on the local job market, with cloud hosting opportunities being exploited by large multinational companies. "This means local telcos are constrained from moving into cloud-hosted IT, while the large international companies are taking up this growth."

He says many companies are currently trying to reinvent themselves to scratch out an earnings stream. For instance, he says, telcos are increasingly playing in the banking space, while banks are moving into IT territory.

The numbers

During the year, Telkom has seen the biggest amount of job losses, as it aims to trim costs and increase efficiencies through an organisation-wide restructuring process. During the first phase of this process, Telkom shed 302 management-level staff through voluntary severance packages and voluntary retirement packages - exceeding its stated target of 223 job cuts.

In October, mobile operator Cell C informed some of its employees they may face retrenchment, as the company has embarked on a restructuring process. The operator stated this may affect 190 of the company's 1 458 employees, and plans are to finalise this process by 31 January.

Similarly, MTN recently stated it is looking to axe more than 800 managerial positions as it seeks to cut costs, citing poor returns and sluggish growth as reasons for the intended retrenchments.

Business process outsourcing company Inter-Active Technologies also joined the retrenchment wave, axing 4% of its 1 127 staff, due to what it described as "extreme pressure" on SA's economy.

Meanwhile, the state-owned Technology Innovation Agency announced it is seeking to undergo a major restructuring process, which would include retrenching as many as a third of its current 193 employees. However, Solidarity says it is currently engaging with the company and has managed to halt job cuts for now - at least until March.

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