People and Work – How will the South African Labour Market Change over the next 14 years?

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LABOUR MARKET SCENARIOS 2030:People and Work – How will the South African Labour Market Change over the next 14 years?
by Marius Meyer

Projections concerning the South African labour market into the future are almost invariably gloomy.  It seems that unemployment will not reduce significantly and the shortage of skills which hampers strategy execution for many South African organisations will not improve any time soon as the education system from early childhood to university fails to meet the needs of both young people and employers. One of the major factors influencing how the labour market develops is the economy, and at present, debate over the economy is marked by entrenched ideological differences between politicians, business leaders, union leaders and other key stakeholders, and an apparent inability to dialogue constructively to find an accepted way forward.

Human resource (HR) practitioners working at higher levels of organisations are required to participate in the strategy formulation processes of the organisation, not only to implement agreed strategy.   In order to play this role, they need good frameworks and good analysis of the environment to be able to advise the executive team on probable developments affecting the labour market in general and individual employees of today and of the future. The 2013 SABPP HR Management System Standard requires organisations, in relation to Strategic HR Management, to “Analyse the internal and external socio-economic, political and technological environment and provide proactive people-related business solutions.”  At present, many HR Executives acknowledge a lack of depth in their environmental scanning.

Human beings have a cognitive bias (the continuity bias) which is a temptation to assume that the future will be much like the past. Yet we are constantly surprised by events and discontinuities. Whilst we cannot predict or control the future, we can build stories of possible futures – scenarios. “However good our futures research may be, we shall never be able to escape from the ultimate dilemma that all our knowledge is about the past, and all our decisions are about the future.”[1] The development of alternative scenarios to describe what could happen under certain circumstances allows us to work out the impact of those scenarios, to work out how to adapt to these possible futures and to influence the key drivers of those futures.

Thus the strategy teams of organisations can use scenarios as the basis for their strategy formulation – either to take action now or to have a contingency plan for if the probability of one of the scenarios increases or decreases significantly.  We probably won’t get the story of the future exactly right, but we will get the idea of the future.

In March 2016, the SABPP convened a group of 50 senior HR practitioners, academics and consultants under the facilitation of Clem Sunter, recognised within South African and globally as a top scenario planner, to think about how the labour market could evolve under different scenarios.

Frans Cronje, in his book A Time Traveller’s Guide to Our Next Ten Years, cited above, explains that, due to the complexity of political, social and economic systems, they can only be understood in the framework of complex systems theory (which was developed in the natural science disciplines). Extremely complex systems are characterised by:

  • A very large number of participants (stakeholders);
  • These participants interact regularly with each other;
  • Through that interaction they direct feedback into the system based on how satisfied they are with their circumstances in that system.

In any given situation, it is likely that some of these stakeholders will be satisfied and therefore prefer to maintain the status quo, but others will not have their expectations met and will want to change to system to improve their circumstances.  Obviously, this leads to conflict and the resolution of this conflict depends on relative power within the system. Disruption of a complex system can be sudden and dramatic and most often not predicted. Therefore,  a wide view of the components of the complex system must be developed.

As outlined in the various books of Clem Sunter and Chantel Illbury[2], the process of creating scenarios is an outside- in process and starts with looking at the Rules of the Game – these are patterns which can be seen now and are fairly certain to apply over a period of 20 – 30 years. One example would be the aging of the population in Europe and Japan.

Having thought about those as constants or assumptions, the process continues with identifying Key Uncertainties – patterns which can be seen now but we have no idea which way they will develop. An example of this would be the enormous wave of migrants moving across the world and in particular from the Middle East moving to Western Europe – at this point (June 2016), it is very far from clear for how long the wave will continue and how Europe will handle the matter, but the issue has huge consequences in many different ways.

From this discussion, the group synthesises two polarities to describe the two key trends which will frame four possible stories of the future; these stories are fleshed out; “flags” are identified which will indicate in which direction the future is developing; and finally the group agrees on probabilities for each of the 4 scenarios as evaluated at present.  Ultimately, the goal is to provide clear scenarios for top management teams and HR Directors in preparation for their strategic planning in relation to the National Development Plan (NDP).  A well- functioning labour market will be key to achieving the goals of the NDP.  The four scenarios developed will be launched on 27 and 28 July 2016 at the 4th Annual HR Standards Conference organised by SABPP.

[1] From Scenario Thinking to Strategic Action”. I. Wilson. Horizon, 2000. Cited on p. 234 of A Time Traveller’s Guide to Our Next Ten Years. F. Cronje. 2014. Tafelberg.

[2] Mind of a Fox Trilogy, 2011, Human and Rousseau, Tafelberg; Flagwatching, 2015, Human and Rousseau, Tafelberg

Staff-Marius

Marius Meyer is CEO of SABPP. The research work done by Penny Abbott and Lathasha Subban forms the foundation of the Labour Market Scenarios 2030 Report

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