The Great Resignation and the Rise of the Contingent Worker in South Africa

What is driving this new trend … and why would people resign in a market with a huge over-supply of labour?

The Covid pandemic has brought many changes to the way the world goes about its business; namely, the way we socialise, the way we travel, we way we take care of our health, the way we shop, the way we do business, the way we structure our time and the way we work. But the biggest change that the pandemic has brought is a change in the way people think about their lives. Employees worldwide were locked down at home for months at the beginning of the pandemic and when employers asked them to return to work, employees had become used to working from home, or working from anywhere (WFA). This period prompted an introspection of their own purpose and the purpose of their jobs. If their purpose was not aligned to their jobs and their employee value proposition, it resulted in employees resigning (even in the face of not having a new job yet) – now dubbed The Great Resignation!

South Africa is no exception to the rest of the world but has local nuances that are playing out largely because of our massive unemployment rate. We have a +-35% unemployment (According to Stats SA’s strict definition) and +-65% youth unemployment (expanded definition)- so why would people resign in a market with a huge oversupply of labour? The reason is that South Africa’s Great Resignation is ring-fenced in the professional and specialist roles that are scarce skills in the market. In 2020, the first year of the pandemic, staff turnover rose to 18% up from the South African average of 10% but this was largely due to retrenchments and job losses as companies downsized, closed, or liquidated. In the second year of the pandemic (2021) staff turnover stabilised at the national average of 10% once again but what did change was the huge proportion of resignations – nearly 40% – that made up the sum of the staff turnover. (www.21century.co.za).

Many of these resignations were made up of people who had re-evaluated their lives and chosen jobs that gave them the flexibility and autonomy they had experienced during the first year of lockdown. Traditionally the number one reason for resignation has been better pay followed by better career opportunities and development. This trend has flipped, where only approximately 20% now resign for better pay, whilst more than 70% resign for a better work-life balance, flexibility, career development, and a healthier culture and leadership.

These factors have driven the rise in the contingent worker. A contingent worker is an employment relationship usually with limited job security, payment in cash with no limited benefits, payment on a project basis, payment on as contractual basis for outputs or time worked. Contingent workers come with many names eg. Freelancers, consultants, contractors, non-permanent workers, temporary staff and independent workers. Often contingent workers take care of their own taxes through their own legal structure. Traditionally, these jobs commanded 30% or more higher wages than the “employed” jobs, but the new contingent worker is not necessarily demanding this premium for their contingent work. What is driving this new trend? Contingent workers put more weight into the “conditions” of work that allow for complete autonomy, complete flexibility in the hours of work, flexibility in where they can work, personal upskilling and development, reduced travel and cost of travel, improved work-life balance with increased time for family and friends.

This trend has also resulted in these people being able to move to quieter areas in in the country where they can live in nature with lower costs and less pollution. There has been a migration of contingency workers from the cities to towns like Hermanus, Greyton, Swellendam, Hartbeespoort, Riversdale, Gansbaai, Rooi-Els, Plettenburg Bay, Langebaan, Umhlanga, Somerset West and Robertson.

Recently, I met a sales lady who was retrenched during 2020 after serving her company for 18 years. She now changes her work environment to one where she sells for a competitor to her original company on a commission basis with complete flexibility to bring up her small children whilst selling from her house, virtually. She also upskilled herself to sell associated lines of product and now has 3 new “employers” that she sells for. She told me “Covid was the best thing that could have happened to me – it made me take a risk and re-define my life the way I want it”

A lot of these new contingent workers put quality of living ahead of salaries and make up the difference in the previous premium income by living in lower cost areas, travelling less, and having simpler family-focused lives. As long as they have good connectivity and computer equipment, they can work more efficiently, more effectively and with less management oversight than traditional employees. This means both the contingent worker and the employer company win – the contingent workers new purpose is met, whilst the employer requires less management and responsibility for these people. Both parties have increased flexibility although both have reduced security of supply and demand.

Find out what the market is doing by joining our FREE SURVEY for employers as we explore the growth in the Contingent Workforce category.

See further details:
https://www.21century.co.za/snap-survey-contingent-workforce/

Written by:

Chris Blair
CEO
B.Sc. Chem. Eng., MBA – Leadership & Sustainability

[email protected]

Bryden Morton
Executive Director 
B.Com (Hons) Economics

[email protected]