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By Martin Magidi and Tariro Chivige
Running a business in South Africa is becoming increasingly difficult. The challenges range from its economic consequences Covid-19 pandemic To limited access to financeincreased global competition, changes in trade relations, technological change And governance issues.
As researchers interested in urban economies, we set out to understand the biggest challenges facing businesses seeking growth in the Western Cape. Study This involved surveying 426 businesses to gather the views of employers directly.
Our findings show that their biggest barrier was a lack of digital, soft and environmental sustainability skills. These gaps were the result of weaknesses in education and vocational training.
These findings are consistent with broader South African labor market problems, e.g. bad schoolingLimited practical skills and a mismatch between what people learn and what What employers really need.
Skills shortage affects not only job seekers but also business productivity, growth and competitiveness.
Yet most companies in our study reported spending only 1%–4% of their wage bill on employee training.
We argue that educational and training institutions play an important role in developing skills, but businesses also have a responsibility to train and develop their employees.
Business challenged by skills shortage
The study collected the views of 426 business owners and senior managers on how various factors affected their operations. Those factors included institutions, infrastructure, labor markets, skills, product markets, and the natural environment.
Skills shortage emerged as a major challenge facing businesses in the Western Cape.
More than 70% of respondents said they struggled to find workers with the right skills.
Many believed that schools and vocational colleges were not adequately preparing young people for the workplace. For example, 43% said that secondary school and vocational graduates had only basic workplace skills. Overall, businesses rated the skills acquired through primary, secondary and vocational education poorly. About 58% said that secondary education meets some of the needs of a competitive economy, while 53% believe that vocational education is only somewhat relevant to business needs, or not at all.
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More than half (52%) said university graduates have the skills they need for their businesses. However, about half of employers disagreed.
Most businesses also reported that their employees lack strong mathematical and data skills. Nearly 55% said that despite the importance of innovation, evidence-based planning and economic competitiveness, workers demonstrated little or no proficiency in these areas.
vocational training is weak
The study also shows that weaknesses in the technical and vocational education and training (TVET) system contribute to the skills gap. TVET institutions aim to equip learners with practical, job-ready skills. But nearly 50% of employers said graduates still need practical training before they can be productive.
Furthermore, 59% of employers believed that vocational education only partially meets the needs of the economy, while 62% rated the quality and relevance of vocational training to their business needs as poor. Employers believed that stronger partnerships between training institutions and industry, with more apprenticeships, workplace experience and updated curricula, could improve graduate preparation.
Digital skills are being left behind
Digital skills have become essential in business, but most employers believe that employees are not keeping pace with these changes. As many as 55% of businesses surveyed believed that their workforce had only basic digital skills and computer literacy. More than half (52%) said it is difficult to find employees ready for digital transformation. And 70% rated the technology skills of their workforce as poor or very poor. Employers believed that these shortcomings limited innovation and productivity and weakened competitiveness.
Soft skills matter too
Beyond technical skills, employers also reported gaps in “soft skills,” also known as interpersonal or people skills.
Creativity, problem solving abilities, good work ethic and self-confidence were lacking. Over 60% of employers rated their workforce's skills in these areas as only “minimally” or “mildly” adequate.
This result highlights that the current education system does not do enough to develop the skills that are important for critical thinking, decision making, innovation, practical application of knowledge and solving problems in the real world.
environmental skills are rare
As South Africa strives to build a green economy, businesses need workers with environmental and sustainability skills. Many employers said these skills were rare.
About 50% considered workers' environmental awareness and knowledge of green practices as “minimally” adequate. Only 48% reported that they were able to find workers with these skills to some extent.
This suggests that more training in green skills may be needed. As environmental regulations become stricter and demand for sustainable business practices increases, these shortcomings may limit the ability of businesses to compete in emerging green markets.
Closing the skills gap will make businesses more productive and competitive, and more people will be able to find and keep jobs.
Businesses need to invest more in training
Half of employers described access to education and training services within their organizations as very limited or expensive. This indicates that both businesses and employees face barriers to obtaining quality training.
This highlights the need for greater investment in workplace skills development and improvements in the education system.
Closing the skills gap will make businesses more productive and competitive, and more people will be able to find and keep jobs. Achieving this will require stronger partnerships between government, education and training providers and businesses, as well as greater investment in workplace training.
Martin Magidi is a researcher at the University of Cape Town and Tariro Chivige is an economist
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