A third of CEOs plan to reduce headcount despite rising unemployment

PwC survey finds that more CEOs than ever before are planning to reduce headcount this year.

Africa is home to the youngest population in the world. According to the Population Reference Bureau, young Africans are expected to make up 42 percent of the world’s youth in 2030, accounting for 75 percent of people under 35 on the continent.

With such a large population of young people, supportive policies and programmes on inclusive youth development are critical now more than ever.
This month Statistics South Africa revealed that 32.6 percent of South Africans are unemployed. PwC Africa CEO Dion Shango said it was disheartening to see that 46 percent of CEOs had reduced staff in the past year. He was speaking at the virtual African Business Agenda summit earlier this month.

According to PwC’s 24th Annual Global CEO Survey of 1,779 CEOs in 100 countries, including 50 CEOs from 14 African countries, 42 percent of CEOs are looking to hire more people this year.

The past year has forced many companies to relook performance management and the overall health of staff. The survey showed that 44 percent of CEOs are prioritising performance management while 34 percent said they are focusing on employee health and well-being. “They want to improve engagement of the workforce and bring out the best in their staff,” said Dion.

At least 34 percent of CEOs want to address workplace culture, and 24 percent are rechannelling efforts to improve productivity through automation and technology.

But Dion also noted another alarming trend. At least 34 percent of CEOs are planning to reduce their headcount again this year. “It’s not good for employment and societal progress. Hopefully, acceleration and economic growth will reverse this trend or cause CEOs to reassess their decisions,” said Dion. He said that this year’s reduced headcount would be the highest in the history of the PwC survey.

Dion said there is a correlation between scaling down headcount and increased investments in digital initiatives. “Many CEOs out there see a direct correlation from taking advantage of new digital tools, skills and ways of working, versus how many people you need.”

Digital transformation was also the theme of last year’s report. The pandemic forced companies to accelerate their digital transformation and embrace the technologies powering the digital economy.