Recruiting on hold as election results are digested
The elections in South Africa have come and gone with no surprises, which is good news.
Turnout was high, the electoral machine worked smoothly and the results were as expected. What is much less predictable now is what the new president will do. The financial sector hopes that, faced with the realities of executive power, he will tone down the populist rhetoric and stick to the orthodox, investor-friendly policies pursued by his predecessors.
One key test will be the role the internationally respected Trevor Manuel will have in the new government. Manuel, the longest-serving finance minister in the world, is expected to retain his post or even be elevated to the vice-presidency thus providing a powerful signal of continuity. Another test will be relations with Tito Mboweni, the strict inflation-targeting Governor of the Reserve Bank, whose term expires in August this year.
This post-electoral uncertainty, combined with the near-certainty of a recession, expected to be shallow but protracted, has led to a marked slowdown in recruitment activity, experts say. "We have already seen a trend of pursuing a retention or 'maintain what we have' strategy in most sectors, but at least there have been no large retrenchments," says Peter Mommsen of Unique Personnel. "Banks have always acted cautiously and will continue to do so until the end of the year, but after that we expect to see expansion and growth again."
South Africa's big four banks are financially sound, have no major liquidity problems and have needed no government help. But they have been battening down the hatches in the expectation of a prolonged economic slowdown with a corollary of mounting bad debts.
"It will be a very tough year for banks in South Africa and not of their own making," Errol Kruger, South Africa's Registrar of Banks, said this week. Maria Ramos, Ceo of Absa, warned that "the depth and breadth of this crisis remains severe and uncertain" and that all financial institutions will be hit.
In this gloomy scenario expansion is not an option and hiring is being kept to a minimum. "Out of the four big banks two already have official recruitment freezes on, while the other two are only recruiting critical roles," says Bonnie Currin of PAG (Professional Assignments Group). "In general, there is a major slow down in employment opportunities in the banking sector and most positions we have been working on in the last few months have been put on hold. We have only been supplying temporary staff in the credit areas."
