Retrenchments and a shifting employment market

Since the beginning of last year, our development team has once again seen a huge increase in the number of large-scale (and small-scale) retrenchments that we are managing. Our work in this area started in the very-early 2000’s when large-scale retrenchments took place across South Africa and it became evident that the global model for outplacements was not going to achieve the needed results in a country that has an unemployment rate consistently above 30%. Whilst most outplacements programmes focus on career coaching, personal counselling and job search, the reality is that we need to turn the idea of employment on its head.

On average, 60% of the participants we work with elect to complete our entrepreneurial programmes. Even if they ultimately find employment, a small business will often help boost household finances and can be run later by a family member. Almost all employees elect to have some level of financial coaching and support, and increasingly, this is to understand how to maintain multiple households’ expenses which shows us the dependency ratio is climbing. We see exactly the same need to support people with trades, as we did 25 years ago. Tradespeople often not holding the right level of certification or qualification, but with fantastic working experience, reiterating that if we want to achieve a different hiring result, then perhaps our recruitment models need to shift, to recruit for experience, and then invest the circa R10 000 to fulfil a Recognition of Prior Learning (“RPL”) to convert work experience into a qualification.

A new trend, is the acceptance that digital and technology skills are the ultimate leveller. With the right access to technology, earnings are able to be earned at home, after hours, on weekends, and in any country in the world. There is no reason why a South African developer cannot be developing for clients in Australia, the UK or the rest of Africa. If we wish to shift the reality, we are going to have to shift the “business as usual” approach to managing people. As with all Siyakha projects – the key lies in collaboration and having a good strategy. Yet again – the use of B-BBEE budgets for ED & Skills is able to support employees at the “exit” level of the employment relationship. Engagement with #UIF, #NYDA, #SEDFA provides support for employees to match-fund employer-support.

Consultation on changes to the Labour Legislation recently proposed an increase in the amount of severance pay for retrenched employees from 1 week for every completed year – to 2 weeks. Doubling the cost of retrenchment and increasing the consultation period for procedural correctness to manage a retrenchment could be highly risky because organisations who follow extended retrenchment processes lose productivity, which, in turn, could leave to deeper financial issues. Harvard Business Review shows almost 70% of managers are suffering from burn-out due to the emotional stress of managing these processes and employees, in reality are still exiting into the reality of high levels of unemployment. It doesn’t change the effect – it appeases the individuals impacted for a few weeks perhaps but we fundamentally need to prioritise financial planning, work-readiness, self-sufficiency and personal skills needed to create resilience and authentically mitigate the impact of retrenchment.

If there is one recognition we all have, in South Africa, it is that we must be part of the solution in driving social stability and planning ahead. Job losses are inevitable as mechanisation and AI take precedent to be globally competitive, but this need not necessarily lead to unemployment. It will require for many people to be “differently-skilled” from where they are now. The idea and definition of what a “job” is, probably also needs a rework to consider a different way of developing skills, a broader consideration for outsourcing instead of employment, or 20-hour working weeks as a means to spread the earnings potential and allow employees time to pursue entrepreneurial or mental health or community work to create a balanced society.

The latest draft Labour Law amendments propose key changes to improve dispute resolution, protect non-standard workers, and enhance fairness in dismissals and retrenchments. Key updates include strengthening the Labour Court, refining essential services rules, expanding unfair labour practice definitions, and regulating fixed-term contracts. The proposals aim to balance worker rights with economic stability while ensuring smoother industrial relations.

A copy of the latest draft Labour Law amendments is available on the NEDLAC website: https://nedlac.org.za/wp-content/uploads/2025/02/FINAL-Nedlac-report-LLRTT-1102-v13.pdf