South African businesses in a panic over emigration

Staff Writer8 March 2023


A new white paper from payroll services group Playroll, in partnership with tech and developer jobs marketplace OfferZen and executive recruitment firm Aims International, shows that South Africa’s skills crisis runs deeper than industry-specific shortages portray.

The group’s research found that close to 80% of all business leaders it surveyed consider the emigration of skills one of the critical risk factors facing their organisations.

This comes at a time when emigration appears to be accelerating, it said.

Playroll noted that over 900,000 South Africans have already left the country – a number that was most recently published by the UN Department of Economic and Social Affairs’ 2020 International Migrant Stock report in 2022.

According to the UN report, by the end of 2020, 914,901 South Africans were living in other countries and territories, up from 786,554 in 2015.

Worryingly, three times as many people emigrated from South Africa between 2015 and 2020 – over 128,000 people – than between 2010 and 2015 (43,000 people), the data showed.

The UK has the most migrant stock from South Africa, with almost a quarter of a million residents listing RSA as their birth country. This is followed by Australia, the USA and New Zealand.

Playroll said that the problems around the emigration of critical skills run deeper than even these numbers show because, increasingly, young people are the ones leaving.

The group noted that those aged between 25 and 40 are the most likely to leave the country – and possibly more concerningly, over half of South Africa’s graduates have the potential to emigrate in the future.

Senior employees are also more likely to relocate, probably because they have the financial means to do so, it said.

The trend of younger people leaving has been supported by the most recent tax data from the South African Revenue Service (SARS). In lieu of any official government data on emigration, the number of South African taxpayers who have ended their tax residency in the country provides some insights into these trends.

SARS’ data shows that over the last five years, over 40,500 taxpayers have ended their tax residency, and in more recent years, lower-income earners are making up a bigger proportion of these taxpayers leaving.

Tax experts at Tax Consulting SA said that this is an indication that younger South Africans are deciding to end their tax residency, likely to seek opportunities abroad.

Playroll said that emigration is becoming a major issue across business sectors, with companies with an operational or manufacturing focus experiencing increasing pressure to fill roles that were once the preserve of the finance and high-tech sectors.

“Interestingly, the results of our survey showed that while most companies considered C-Suite and management tiers as the most vulnerable to emigration, tech-focused businesses perceived the threat at an associate level,” it said.

“This suggests that tech and software industries are the bellwethers, not just of employer sentiment, but of actual demographic trends, as they show up in the emigration data. With no respite on the horizon, the South African business community is understandably on alert.”

The group noted that the UK was the top emigration destination for expats in 2022, followed by Australia and Portugal.

The top reasons people leave to move abroad include a better quality of life, earning potential, personal safety, and career growth.

Problems closer to home

Playroll noted that the skills crisis isn’t only playing out by South Africans emigrating, however.

Many skilled and qualified professionals who are choosing to stay in the country are now also taking advantage of the remote work opportunities provided by global organisations, it said.

According to Simonetta Giuricich, Chief Operating Officer for Playroll, remote work arrangements that were fuelled by Covid-19 means that many skilled South Africans are not available for local employment because they can access high-paying work opportunities with international companies while still staying in the country.

For example, the group’s research showed that an alarming number of local software developers are working for overseas companies while still being based in South Africa. It estimated that 40% of the 120,000 developers in the country are working remotely for foreign companies.

So even though emigration may be slowing down in certain sectors, this doesn’t necessarily mean good news for local businesses.

Giuricich said that the loss of employees to emigration not only creates immediate gaps in the skills and qualifications required by an organisation but could also lead to entrenched competitive challenges in the longer term.

Playroll suggested that businesses look beyond simply offering more pay to retain key talent.

“An attractive job package people are willing to stay for means more than just take-home pay. Make sure to consider non-pay-related factors like work arrangements flexibility, and you could have a winning recipe to retain your best people,” it said.

Playroll’s research found that there was near unanimity among businesses on the importance of flexible work policies for retaining talent in South Africa.

“A renewed emphasis on retention is likely to accelerate conscious implementation of greater work contract flexibility across the board – not only in tech,” it said. “A majority of those surveyed
acknowledged the gap that remains in satisfying a hunger for greater work flexibility – with one respondent describing the deficit as ‘an elephant in the room’.”

The group said that to overcome this gap, South Africa’s business community will need to consider fresh talent relocation options outside of traditional solutions that typically prove unscalable.