Don't confuse skills mismatch with skills shortage

The IMF’s World Economic Outlook published on Monday reported SA’s labour market skills mismatch as one of the concerns.  However, Business Live/Day reported this as “IMF flags SA’s skills shortage”.  This is misleading and inaccurate. 

It repeats the false narrative there’s a dire shortage of skills that’s “harming the economy”, as Western Cape economic affairs MEC Alan Winde and Wesgro’s Tim Harris said about two years ago without presenting evidence (I asked).

A skills mismatch is not a skills shortage. The World Economic Forum’s Global Agenda Council on Employment (Matching skills and Labour Market Needs, January 2014) describes it like this:

“Skills mismatches occur when workers have either fewer or more skills than jobs require. Some mismatch is inevitable, as the labour market involves complex decisions by employers and workers and depends on many external factors. But high and persistent skills mismatch is costly for employers, workers and society at large.”

It’s not uncommon globally either. WEF states it’s “become more prominent in the global economic crisis.  However, it is primarily a structural issue.”

In SA the establishment – media, government and business – pushes the “skills shortage” narrative for tendentious agendas, or out of ignorance.  While I’ve not been able to find credible research about SA’s alleged skills shortage, last year development economist and Cape Argus columnist Gavin Chait gave me the closest answer: there are sufficient skills to meet the existing economy, and while skills are essential, they’re not sufficient for growth.

Consider that graduate (the majority are in science, business and related, engineering and technology) unemployment is only 4.5% (Quarterly Labour Force Survey 2016), or near full employment if we accept labour market churn, which is normal. According to Chait “the economy is precisely the right size for the skilled employees available for hire; there is no skills shortage”. But it’s not creating jobs for all who want to work.  Note graduate unemployment is increasing (from about 1.6% before), tracking high general unemployment.

Also consider University of Pretoria’s Dr Amaleya Goneos-Malka's study showed PhDs account for only 0.07% of 1.4 million employees at South Africa’s top 350 companies, far below the global average.  They can’t find work because employers consider them “overqualified”, overpaid and frustrated. 

I could go on, eg, how the Department of Higher Education’s "high demand", ie, “scarce skills” schedule is nothing more than a list of all jobs available at a particular point in time, including bricklayers, office assistants, etc and not necessarily skilled posts.

As the IMF’s David Lipton said at Wits last year, the SA economy faces huge problems.  But skills is not at the top of the list.  Media and government and business spokesmen should be more careful in their statements and not put words in the IMF’s, WEF's, etc mouth, either out of ignorance, sloppy research or to pursue an agenda.