South African organisations are grappling with a growing “talent paradox” as rapid artificial intelligence (AI) adoption collides with a deepening skills shortage.
This is according to Mercer’s 2026 Global Talent Trends report, which draws on insights from nearly 12 000 executives, HR leaders, investors and employees worldwide, including SA. The research was conducted between September and October 2025.
The findings were broken down according to respondents’ geographic region.
The report paints a picture of SA’s workforce being at a critical inflection point. While businesses are accelerating AI integration to drive productivity, the lack of skills and trust threaten to undermine long-term growth, it finds.
The report identifies talent scarcity (52%) and digital acceleration (50%) as the leading forces shaping workforce strategies in SA. Yet, the human impact of this transformation is becoming evident, with only 41% of employees reporting they are “thriving” in their roles, below the global average of 44%.
“The data shows that South Africa is navigating a complex talent paradox,” says Keletjo Chiloane, senior associate at Mercer SA.
“While 68% of local executives expect a high return on investment from AI-driven work redesign this year, the success of these initiatives rests entirely on the human element.”
Chiloane adds that organisations need to rethink their approach to AI. “To unlock exponential growth, businesses must move beyond seeing AI as a tool for mere automation and instead use it as a catalyst for a more sustainable, human-machine teaming model.”
A report released this week by Pnet revealsAI literacy is rapidly emerging as an important skill in SA’s labour market, with companies increasingly seeking candidates who can apply AI tools across everyday functions, not only in technical environments.
The Pnet report suggests organisations are increasingly competing for candidates who can demonstrate practical AI application skills, not only technical AI engineering experience.
A central theme emerging from the Mercer findings is the urgency of reskilling. While 78% of employees trust their organisations to equip them with new skills as AI reshapes jobs, more than half (53%) fear their current capabilities may soon become obsolete.
This concern is driving a shift in employee priorities, with 65% indicating they would trade a 10% salary increase for opportunities to build AI and digital skills.
“We are seeing a profound shift in the employee-employer compact,” says Mpho Maponya, head of business development: Mercer SA.“South African talent is incredibly proactive; they are willing to make financial trade-offs for career longevity.”
Maponya notes that leadership must now focus on execution rather than intent. “The challenge is no longer just identifying the status quo but executing a skills-based strategy that addresses the ‘fear of becoming obsolete’ while building a culture of continuous learning.”
Despite the productivity gains linked to AI − with 83% of employees reporting improved efficiency when using these tools − the report highlights a growing “trust gap”.
Nearly three-quarters (74%) of employees are concerned about AI being used for workplace surveillance, it says.
This disconnect extends to broader workplace dynamics. While 88% of executives believe their organisations foster trust, only 68% of employees agree that trust exists among colleagues.
Compensation pressures also remain a key driver of workforce movement. Among employees considering leaving their jobs, 50% cite higher pay elsewhere as the primary motivator, followed by limited flexible working options (41%). However, non-monetary benefits are gaining prominence, with 64% willing to trade part of their salary for improved medical cover.
The report ultimately calls for a new leadership blueprint, centred on human-centric capabilities. South African employees ranked communication (71%) and empathy (67%) as the most critical leadership traits in navigating ongoing disruption.
“To compete globally, South African businesses must close the digital agility gap, while ensuring empathy and economics remain in balance,” Chiloane comments.
“Success in 2026 requires leaders who can manage these paradoxes − focusing on performance and technology without losing sight of the workforce’s well-being and trust.”
Share
