South Africa: What was hot and what was not in 2009

2009 was the year that South Africa finally felt the hit from the global financial crisis. The country had to endure its first recession in a generation, foreign investors got cold feet, consumer confidence tumbled, over a million jobs were lost. The unemployment rate in the third quarter of 2009 rose from 23.6% to 24.5%, one of the highest in the world, with manufacturing and retail the worst-hit sectors. In a not-so-glorious year for financial services, some did worse than others:

1. Foreign banks:

Reeling from their parent companies' woes, foreign banks in South Africa battened down the hatches and went into survival mode. Hiring plans, with very few exceptions, went into the deep freeze along with expansion plans. "It was nothing compared to London or New York, but it was certainly noticeable, - says Phryne Williams, director of Capital Assignments, a financial services recruitment firm. - There was no business to be had from international banks, they all had hiring freezes on. They took a big knock."

2. Mobility:

The crisis engendered a climate of fear and uncertainty which persuaded people who had jobs to hold on to them. A record number of people took sabbaticals, unpaid leave and career breaks to reassess their options, but less people chose to jump ship, due to a (partly real, partly perceived) lack of opportunities. Ambition and a sense of adventure took second place to survival and a preference for the devil you know.

3. Salaries:

The recession gave companies the perfect excuse to crack down on above-inflation salary increases. Many financial services companies had official salary freezes on, others introduced flexitime and reduced work hours. "While lower-level employees' remuneration was often linked to contracts which would have been difficult to change without long negotiations with the unions, it was executives who took the brunt and had to accept salary freezes and even cuts," says Chris Blair Ceo of 21st Century Business and Pay solutions, a remuneration consultancy in Johannesburg.

4. Fund management:

Asset managers were badly hit by the outflow of money by risk-averse investors and there was no recruitment activity to speak of. "Things went very quiet and there has been no hiring at all in the sector", says Mike Atter, SA country manager for Robert Walters Professional Recruitment Services.

But 2009 was not all bad. It was also the year when South Africa proved that it has the strength to shake off the recession. After three consecutive quarters of contraction, growth turned positive again in the third quarter. Sentiment is following suit. Despite the difficult climate, some sectors and companies managed to do well.

Let's have a look at what was hot this past year:

1. Local banks:

Despite falling profits and rising loan impairments, South Africa's "big four" banks displayed remarkable resilience in the downturn. Years of good governance, risk avoidance and conservative lending practices paid off. "Local banks did extremely well, especially compared to their overseas competitors," says Atter. None of the big four ever had an official hiring freeze on and recruiting continued in most divisions throughout the downturn.

2. Investec:

The dual-listed London and Johannesburg-based bank had a year of falling profits and rising impairments, but it gave a masterclass in strategic hiring. Just when everyone else was panic-sacking, Investec played the long game and swooped to pick up entire teams from rival banks in trouble to beef up its investment banking and equity resources divisions. Also, in a year of unprecedented controversy over bonuses, the decision it had taken long ago to link remuneration to actual performance seemed very prescient and wise.

3. Investment banks:

They continued to do well in 2009, both in South Africa and expanding into other African countries. The also benefitted from the pick up in M&A activity in the second half of the year after a dismal first semester. Investment banks have kept hiring and looking for suitably skilled people, often widening their search abroad when they could not fill positions with local talent.

4. Risk management and compliance:

The crisis reminded everyone in financial services of the importance of close supervision, cleaning up risky areas on balance sheets and complying with all regulatory responsibilities. People with specific risk management skills were highly sought after and their rarity made all the more valuable.