The LMIP Briefing is an evidence-based contribution to informing the development of a skills planning mechanism for South Africa. It showcases our cutting edge research and aims to highlight key trends and potential implications from the research projects.

LMIP Briefing 6

Key Indicators of Skills Planning (KISP) project: Indicators are an indispensable component in the skills planner’s toolkit. They are designed to succinctly anticipate, reveal, or diagnose changing conditions in the labour market.  International comparative analysis reveals that there is a growing preoccupation with skills planning indicators, given the salience of skills to economic growth and global competition. Indicator selection is usually informed by current policy priorities. For instance Australia and New Zealand depend heavily on immigration as a skills source, so have indicator systems dedicated to early identification of skills needs and selection of international talent. On a different policy agenda, Ethiopia has committed to a suite of decent work indicators. The EU has developed a system to enhance labour mobility across member states with existing data from member states compiled for indicator use. In South Africa, the LMIP’s ‘Key Indicators of Skills Planning’ (KISP) project is focused on the supply-demand nexus which generates a mis-/matching between work-seekers and jobs. In this model, indicators relevant to supply, current and future demand, matching and contextual intelligence are needed, as reflected in the following examples:

  1. supply e.g. enrolment and graduation rates from post-school education and training institutions
  2. current demand e.g. hard-to-fill vacancies
  3. future demand e.g. anticipated changes in occupational demand
  4. matching e.g. placement of pre-graduates by enterprises
  5. contextual intelligence e.g. skills in demand in the global labour market, and other indicators that provide contextual understanding

The new LMIP report titled ‘Growth, Employment and Skills: The New Growth Path Revisited’, attempts to quantify the NGP’s job creation projections and in particular to assess their feasibility given South Africa’s existing growth trajectory.  The report suggests in the first instance, that the NGP has set ambitious employment targets to 2020 for the economy and policy makers to achieve.  In particular though, a careful reading of these employment projections, suggest that they would require a fundamental sectoral restructuring of the South African economy – away from tertiary sector jobs to those within Manufacturing.  Indeed, the NGP in many senses a growth path designed to generate a quantum leap in the output and employment contribution of manufacturing jobs.  However, the forecasts in this LMIP paper suggest that only two sectors, namely Financial & Business Services and CSPS, can reasonably be expected to reach their NGP job creation targets. Moreover, Manufacturing job creation is forecast to fall well short of the NGP targets – constituting (with Construction) a shortfall of some 1.25 million jobs. Within this 1.25 million job shortage, over a quarter of these jobs would need to emanate from higher education trained individuals.  The results suggest that, unless a structural transformation takes place within the South African economy, the main job creation industries have been, and are expected to continue to be, the Financial and Business Services and public sectors.