South Africa’s economic activity could be boosted by 4.8% if the country encouraged older adults who want to work but are not employed to re-enter the workforce.
This was revealed in a study by global consulting firm McKinsey and Company, which studied the effect of getting retirees to rejoin the workforce if they want to continue to work.
Senior partner Hemant Ahlawat noted that if older adults who aren’t working were enabled to re-enter the workforce in 21 surveyed countries, it could result in a boost of $6.2 trillion in annual GDP opportunities. This equates to an average uplift of approximately 8%.
The benefits of older people re-entering the workforce include older people working and carers of older adults being able to return to the workforce.
South Africa has a very young workforce relative to other countries. So, the benefit of older adults returning to the workforce is not as great as in South Korea and Japan, which have ageing populations.
However, South Africa does have the advantage of a large proportion of its population over 55 wanting to work, with over a quarter of those surveyed wanting to reenter the workforce.
Another advantage the country has is that many of the adults above 55 are highly skilled and would be able to help South Africa address its skills crises in multiple sectors of the economy.
Eskom, for example, has been trying to get retired engineers back into its workforce to bring back the skills needed to bring load-shedding to an end.
However, skills shortages are not only confined to ailing state-owned enterprises but extend deep into the private sector as well.
Construction company Wilson Bayly Holmes (WBHO) warned that South Africa is facing a significant talent drain across multiple sectors due to the country’s many challenges, particularly rising crime and corruption.
WBHO’s chairman, Louwtjie Nel, issued this warning to shareholders in the company’s annual report for the past financial year.
Nel said the construction sector faces multiple headwinds, which have shrunk the industry by 44% over the past six years.
“There is an urgent need for South Africa to prioritise upholding the rule of law. The adverse effects of not doing so are becoming increasingly obvious,” Nel said.
“Crime and corruption function as significant deterrents to business and investor confidence, demanding swift and decisive action.”
“We strongly urge the government to combat the growing tide of criminal extortion and corruption that is affecting South African society, particularly within the construction sector.”
One consequence of these challenges in South Africa is a significant talent drain across various sectors.
Finance Minister Enoch Godongwana noted in a May Parliamentary session that 2,700 individuals earning over R500,000 annually, along with another 1,100 earning over R1 million, have left the country.
This departure equates to a loss of R1,3 billion in tax revenue for South Africa.
Of greater concern for Nel is that many young professionals, including engineers and quantity surveyors vital to the construction industry, are departing in search of opportunities abroad.
“This trend does not merely impact the construction sector. It has far-reaching implications for the national economy,” Nel said.