Foreign Investment and Skills to Fuel the Presidential Employment Stimulus

Foreign Investment and Skills to Fuel the Presidential Employment Stimulus

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This initiative was established in 2020 and aimed to create massive employment opportunities in a short space of time. The use of digital platforms aided immensely in facilitating job applications by simplifying and expediting the recruitment processes. As a result, nearly half a million people have benefitted from the first phase.

The link between Foreign Direct Invest and the Unemployment Rate

According to the Quarterly Labour Force Survey of the 1st quarter of 2021, South Africa had an official unemployment rate of 32,6%. Young people aged 15 – 34 were the hardest hit, with an estimated unemployment rate for South African youth hanging at a shocking 46,3%.

In stark contrast, the official Nigerian unemployment rate soared to 8% in 2019 just before the pandemic, which sent a ripple through government departments. Nigeria announced that it was calling on all foreign investors to consider Nigeria as a prime investment location, stating that the only way to reduce their high unemployment rate, was to create an enabling environment for foreigners so that they would come in and produce locally. They further said that Foreign Direct Investment (FDI) would help develop the agricultural value chain. This would lead to an industrialisation, which is another step towards improving unemployment.

Numerous studies have been conducted about the effects of FDI on unemployment figures in countries like the USA, Macedonia, Saudi Arabia and Malaysia. They all concluded that FDI could stimulate job creation, boost economic growth, provide global resource allocation, and improve the host-country’s Gross Domestic Product while enhancing their finance ability. The only drawback is that it was a long-run relationship that had to be maintained.

A World Economic Forum study detailed the link between unemployment and FDI in Japan. The study reported that “foreign direct investment usually initiates increases in the production of final goods in foreign countries, which positively affects the production of intermediate inputs in the home country, resulting in the maintenance of, or an increase in, the demand for domestic labour.”

According to Marisa Jacobs, Director from Xpatweb, this finding is best illustrated by the example of foreign companies who developed the South African Contact Centre Industry. “At first, there was an uproar from locals because the call centres had to employ foreign agents to facilitate customer service calls in foreign languages. What everyone failed to recognise was how it led to the subsequent three-fold employment of South Africans across each company’s internal departments, such as finance, marketing, software development, human resources, IT infrastructure, business intelligence, and many more,” explained Jacobs.

Integration and Skill-Sharing in the Workplace

The points mentioned in the President’s letter is a promising start towards rectifying a sad statistic. However, Jacobs warns that there is no way to stop the valuable skillsets and qualified professionals currently leaving South Africa in droves.

“National employment drives and initiatives generally serve to create new opportunities for a younger workforce. While that prepares the next generation of skilled workers, it doesn’t address the present need for certain skills. No amount of novice job creation can fill skills gaps.”

Department of Home Affairs and Department of Labour as Enablers to Creating Employment Opportunities

With the launch of the second phase of the Employment Stimulus, comes news from the Department of Home Affairs (DHA) that it may no longer be able to process work permit applications for foreign nationals by waiving the required Department of Labour (DOL) certification. These waivers were previously accepted to expedite applications for foreign nationals who were urgently sought to fill positions left vacant by South Africans, especially those positions that are highly specialised and scarce but do not appear on the Critical Skills List.

Going forward, it appears the DHA will process General Work Visa applications but would need the requirements to have been met through the DOL first. This could intensify the disconnect that already exists between the two departments.

Not only is the DOL notoriously slow with the aforementioned application process, but they have been mandated to protect and create South African jobs, whereas the DHA has been mandated to enable business to attract and bring in foreign talent to fill skills gaps. This puts the two Departments at odds when it comes to combatting unemployment. While the employment stimulus rightly seeks to favour South Africans before employees abroad, this noble pursuit towards shrinking unemployment figures could retard the allocation of foreign nationals who can do the job right away.

The benefits to securing international talent with the necessary skills can be plentiful when considering how it can influence the local workforce through skills development and concession planning initiatives.

Adds Jacobs, “Hindering or delaying the foreign skills on offer can directly impact the rate at which the local workforce can engage with those skills. It is therefore essential that work permits or visas for skilled migrants be simplified for employers, so that the employment stimulus could enjoy the fruits of skill-sharing.”

The President can use the Employment Stimulus to drive cooperation between the Ministers of both Departments on the converging point where foreign skills and investments can be used to create domestic jobs, and in so doing, strike a balance at the juncture to enable the economy to propel forward.

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Why The Latest Roadblock For Foreign Professionals Who Are Addressing Gaps In The SA Job Market?

Why The Latest Roadblock For Foreign Professionals Who Are Addressing Gaps In The Sa Job Market?

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Should this be the case, applicants will be redirected to the DoL to instead obtain a recommendation certificate, which is prescribed for General Work Visa applications.

Waiver applications submitted since the last quarter of 2020 have been plagued by delays. With a recent focus and pressure on the sustained high unemployment rate, it appears that DHA has made the decision to redirect Waiver applications to the DoL for assessment.

What is a DoL Certificate?

Marisa Jacobs, Director at leading Immigration firm Xpatweb explains “a DoL Certificate is issued by the Department of Labour where South African employers can prove that, despite a diligent search, they are unable to find suitable qualified or skilled South African citizens and/or Permanent Resident holders to fill the position and are as such require a skilled foreign national to fill the role. This certificate is a separate process and prescribed requirement for a General Work Visa application, to be adjudicated and considered by DHA to allow a foreign national to work in South Africa legally.”

Unfortunately, the DoL certificate is an onerous process and takes months to be considered by the Department of Labour. This makes the process burdensome and impractical for employers and as such, they turn to the Department of Home Affairs to waive this requirement.

What is a Waiver?

In line with the Immigration Act, Section 31(2)(c), “the Minister of the Department of Home Affairs may for good cause waive any prescribed requirement or form”. The process to obtain a DoL certificate has been considered cumbersome and lengthy, however, the former Waiver process has proven to be a solution for many South African employers where good cause can be demonstrated on why a foreign resource is suitable for a vacancy.

Jacobs adds “It must be noted that not all foreign nationals will be considered for the Waiver and it’s only those with skills that are scarce in the country and the employer can demonstrate the economic benefit of such a resource to the company and the economy in general, that are considered.”

She further elaborates that “Typical roles that are successfully considered for a waiver, are those that are highly specialised and senior in nature, where there is clear evidence of skills and expertise that would not otherwise be readily available in the country. Any waiver issued is usually conditional to a transfer of skills and development of local talent. A such, the Department of Home Affairs’ waiver support does not take opportunities from South Africans but rather creates opportunities for skills transfer and succession planning through the issuance of a waiver.”

What are my options?

Where you have applied for a Waiver for the prescribed DoL Certificate, you must be prepared that a rejection may be looming, and it is recommended that your residency options and lead processing time towards your anticipated employment are pre-empted and revisited to ensure a proactive approach.

Those who are planning to apply for a Waiver to waive the DoL certificate are equally advised to reconsider their application prior to submission and consult on alternative solutions.

If you think that you might be adversely affected by these recent developments please contact us.

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Skilled Foreign Nationals In South Africa: 5 Areas To Reassess Before Starting Work

Skilled Foreign Nationals In South Africa: 5 Areas To Reassess Before Starting Work

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With the world experiencing an international shift of skillsets, the so-called ‘brain-drain’ has created a wealth of opportunities for professionals or entrepreneurs who have their sights set on South Africa.

The Department of Home Affairs have vowed to fast-track applications for critical skills work permits for those with the necessary qualifications, sometimes without requiring an official offer of employment. However, if you aim to establish a business in South Africa, you will need to apply for a business permit. As you are finalising your applications, it is also the perfect time to re-evaluate your risk cover protection and investment portfolio.

While there are international cover and investment options available for expatriates, they seldom provide the necessary security for you and your family. Here are 5 areas to reassess before starting your work in a foreign country:

1. Health Care

Whether you are working in South Africa as a doctor, a teacher or a business executive, you cannot escape the reality of accident or injury. If you are travelling with your family, medical aid cover takes precedence. The health of you or your family while abroad, should always be considered from the viewpoint of the country you are in. To get peace of mind that you and your family are covered for emergency medical procedures while you are resident in South Africa, consult a medical aid provider who can assist with cover for expatriates.

2. Short-term insurance

This type of insurance provides cover for vehicles, electronic devices, household goods, and more. With the potential trials of adjusting to a new country, not to mention the notable crime rate, this could be the most important type of cover for expatriates in South Africa. As this type of insurance depends in large part on the individual and the items insured, it is best to consult a short-term insurance specialist to advise you on the best solutions available for you.

3. Life cover

One element that often gets overlooked is the need for life cover. Cover areas for death, disability, and dreaded disease, are the more prominent focus points to consider when working as a foreign national in South Africa. While you might encounter exclusions on certain conditions or loaded premiums for others, it is best to find the optimal cover package that will suit your needs.

The biggest advantage to having life cover or risk protection in South Africa, is the fact that you will be in South Africa at the time of needing it. It will pay out in South African currency, in your South African account, which will offer you liquidity while you are dealing with the cause of the claim. It is, therefore, imperative to consult a financial services provider with experience in assisting skilled foreign nationals working in South Africa with their risk cover or investment plans.

4. Income protector

As a business owner or qualified professional working in South Africa, there is no better form of security than protecting your income. In the event of an emergency where you are left unable to earn your regular monthly salary, an income protector can provide you with the necessary funds required to sustain you and your family until you can fully return to your work.

Having cover or investments in the country where you are living and working in, can eliminate potential delays in getting immediate assistance when you need it most. At the point of submitting an insurance claim or needing an emergency operation, you do not want to struggle with obtaining approvals from your service provider.

5. Investments

Skilled foreign nationals are often on the lookout for flexible and tax efficient investment vehicles to store funds in. The country they find themselves in usually offer the most financially beneficial investment options, especially if the company they work for contributes towards their retirement savings or the country allows for tax relief through a Double Taxation Agreement.

In circumstances where the employer-employee engagement becomes a long-term one, or the individual is accompanied by his family, then it starts making sense to look at investing in South African property. Buying a house, much like moving to a new country, can be stressful, but the benefits of not having rental obligations while enjoying the potential growth benefits of an asset, can contribute immensely towards your saving goals.

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Global Mobility And The Technology That Drives It

Global Mobility And The Technology That Drives It

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With the increasing need for automation and remote working, the modern workspace has become more elusive than ever before, as did the vetting and relocation processes of skilled migrants. From tender to implementation, technology has solved many mobility challenges – and created some new ones.

A recent panel discussion about the effects of technology on global mobility processes delivery shed a lot of light on the sector and its future. The virtual LinkedIn event was hosted by Madalina Andrei, who is the Provider Relationship Manager at Xpath.global. The three industry specialists present as speakers were Bianka Budai (Global Mobility Program Manager for Nokia), Gopi Krishna (Global Head of Compensation & Benefits at QuEST Global), and Marisa Jacobs, (Managing Director at Xpatweb, Expatriate Solutions Specialists in Africa).

The pros of technology in the global mobility space

As the speakers shared their experience, the benefits of technology became evident. Krishna pointed out that the biggest impact technology has had on global mobility is that it was no longer about case management or improving on Service Level Agreement (SLA) standards. He believes that technology is all-pervasive and has enabled them to be more focused on the overall experience, for the employer as well as the employee, which could range from ensuring efficiency of remote working to facilitating the relocation process for employees.

“Technology creates transparency, improves user experience, enforces compliance through automated processes and removes individual dependency,” says Krishna.

For Budai, the benefit is not just about a central database that makes sure nothing gets overlooked. She is more excited about the analytics component of modern technology, which goes beyond the usual reports on assignments, nice presentations about geographical locations of assignees or the company’s male-female ratios.

“We have access to all this information,” said Budai. “Not just current data but also the historical data, which can add value to the business management process. We can form part of a business and proactively advise on business plans based on this data. This is something we could never do before.”

The host also made mention of how Xpatweb has made use of technology to conduct their annual skills surveys, which subsequently contributed immensely to South Africa’s Critical Skills List, as well as the Occupations in High Demand List. Jacobs highlighted the fact that the skills that showed the most movement were in the technology sector, which was another example of where global mobility and technology merged.

Challenges solved vs challenges created

The challenges brought about by the introduction of technology to the global mobility sector, differ largely from the challenges faced prior to the arrival of the digital age.

“Our challenges have transformed,” says Budai. “Technology is an enabler. We must now maintain that system and feed it information.”

Andrei, having ample experience herself, was quick to quip that the system will do whatever you tell it to do. However, it is difficult for people to trust in a system or to give over to technology. Also, it takes long to implement new technologies. Those who would have to rely on it, will have to be taught how to use it first. Understanding the process and knowing how to apply technology effectively could prove to be the biggest hurdle for global mobility practitioners to overcome.

“The best automation solution implemented on a bad process would still deliver a bad result,” says Krishna. His comment speaks to getting the process understood and the workflow correct before implementation. “A bad process can only see the gaps getting more emphasized. While there are fragmented technology solutions, global mobility is still a vast topic and requires many things to be integrated. I have not yet seen a technology solution bringing those fragmented pieces together.”

The power of human touch

When asked about the relationship between compliance and technology, Jacobs’ answer put an entirely new perspective on the discussion.

“The relationship between technology and global mobility compliance is indirect. Technology is used to facilitate the visa application process, to better track that process, and to submit documents to government, but, ultimately, it still ends up with an individual who is tasked to review the documentation and make a decision based on the information provided therein. Where technology has been more incorporated, especially with regards to pre-approval, pre-assessments or otherwise individual tax return filings, there remains a manual audit process that can’t presently be automated retaining the need for the human touch.”

The area of compliance is very complex because every jurisdiction will have a different mandate to follow. Technology could bridge the gap and, though still a far way off, the use of Artificial Intelligence could expedite many aspects of the global mobility process. However, the human element will always be a vital factor in the process.

Krishna fondly remembers how the use of tech was called upon during the lockdowns to engage with expatriates and a global workforce overall. He concludes, “The pandemic was a big disruptor. We created Whatsapp groups to keep in touch. In fact, we had to increase the human element! Tech enabled us to focus on this human touch.”

“I agree that the human touch is needed. Technology can never replace it. The two biggest stress events in someone’s life are changing jobs and moving house, an international assignment combines these two, and is compounded by uprooting your life and taking your kids with. Global mobility assignment managers are there to help, facilitate and support you during this process and the role these professionals play in a successful assignment cannot be underestimated” added Budai.

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The Brain Drain Can Be South Africa’s Gain

The Brain Drain Can Be South Africa’s Gain

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Clicks’ Vikesh Ramsunder has announced he’s stepping down as chief executive for presumably greener pastures abroad, which has enabled the appointment of the group’s first black woman at the helm.

Ramsunder was chief executive for three years and will step down at the end of December to take up a similar post at an Australian listed company; the pharmaceutical retailer said.

He follows in the footsteps of other chief executives who have left South Africa and are now serving in senior roles in the UK and Australia.

Last year, IT and telecoms business leaders, former MTN chief executive Rob Shuter and Reunert executive Mark Taylor, left for the UK. Shuter is now the chief executive at BT Enterprise and Taylor now heads Ricoh International.

Former Vodacom chief financial officer Till Streichert left South Africa to move to Spain, where he is now the chief financial officer of travel technology company Amadeus.

Stories of top executives leaving South Africa and the dreaded brain drain are common parlance, and surely the spectre of “human capital flight” crept in when Ramsunder announced his resignation. But all cannot be doom and gloom such departures are used as an opportunity for transformation.

In the case of Clicks, Bertina Engelbrecht has been elected to succeed Ramsunder as the pharmaceutical group’s first black woman chief executive. Streichert left room for the appointment of new chief financial officer, Raisibe Morathi, who is a black woman, at Vodacom.

Marisa Jacobs, a director at recruiter Xpatweb, said there are good examples of how the brain drain made way for needed transformation.

“Every skill that leaves or enters South Africa creates opportunity. It is whether we choose to see this opportunity or focus on the negative and in so doing, create a negative narrative around skills migration,” said Jacobs.

 

MTN’s Shuter’s exit made way for Ralph Mupita,, who was “his planned successor and a reflection of how a world-class board operates with foresight. The MTN non-executives’ strategy gives an excellent blueprint of foresight and succession planning. Where the correct talent is attracted and remains engaged, the rest often takes care of itself,” Jacobs said.

The other side of the argument is that labour or skills shortages abroad have made South Africans attractive as they have sought-after skills. Jacobs agrees international recruiters go after skills and expertise.

“National considerations like transformation are not part of their requirements. They want to recruit the best possible skills and South Africa has much to offer,” she said.

Dawie Roodt, the chief economist at Efficient Group, said broad-based black economic empowerment (BB-BEE) policies contribute to professionals leaving South Africa.

“There are certain groups in South Africa who do feel marginalised because of things like BEE policies and this is a contributor,” said Roodt.

 

Roodt said South Africa’s skills and education levels are generally inferior to the rest of the world. However, ironically, South Africa has a high level of skills because South African universities compare well with the rest of the world.

“Specifically, we have very qualified people in South Africa, specialists and CEOs, and that is where there is a shortage of skills internationally. So that is where the rest of the world is poaching our skills,” said Roodt.

Jacobs says skills shortages abroad differ from country to country, but internationally experienced executives, engineers, IT professionals, chartered accountants, medical professionals, teachers and tradespeople are sought after.

“Even now, there are shortages in the US and the UK for drivers, so we expect there to be more international mobility. We have so many South African top executives who have left South Africa through the years, achieving great success abroad. The world takes note and where executives are only compensated in rands, the move internationally and ability to earn hard currency and free from exchange control appeals to many.”

South Africa has also had its fair share of senior executive imports, who have been paid exorbitantly. Ian Moir, Woolworths former boss, was Scottish and he left the retailer’s balance sheet in a crippling state due to his David Jones misadventure.

The Canadian-born former Sasol chief executive David Constable, who was the highest-paid CEO on the JSE, took home a whopping R50‑million a year. He took Sasol on a journey to the US with his Lake Charles Chemical Project.

Pick n Pay’s long-term chief executive Richard Brasher was imported from the UK.

“More can certainly be done to make it easier to attract top talent to South Africa, especially when one considers the efforts of other countries. But we have done many work visas for what one can only describe as wins for the country,” said Jacobs.

Source: Mail & Guardian

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