Labour market regulation not a deterrent for hiring in Africa

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Results from EY’s new survey, Talent trends and practices in Sub-Saharan Africa (pdf, 3.2mb), reveals that while regulation in the labour market is increasing, this is not seen to be a deterrent to hiring new employees.

In the survey of 224 multinational and African organisations doing business in Sub-Saharan Africa across 23 countries, 58% of respondents indicated that labour market regulation had increased recently, and 64% indicated that they expected to experience more regulation in future years.

Notably however 74% of respondents indicated that this increase in regulation would not deter them from hiring new employees. These results may partly be explained by the fact that most respondents indicated that they are compliant employers - 96% indicated that they either met or exceeded minimum standards set by legislation. 

Faith in labour market institutions is less convincing: only 52% of respondents indicated that they viewed these institutions as effective.  Given that almost two thirds of respondents anticipated an increase in unionisation and collective action in the future, this tepid view of labour market institutions could be cause for some concern for those employers who would rely on these institutions to assist in the resolution of labour disputes.  Multinationals, however, appear to have more sophisticated dispute resolution processes in place and may therefore be less reliant on statutory structures to assist them.

David Storey, EY’s EMEIA People and Change Leader responsible for the survey, said that to some extent the survey debunks the myth that labour market regulation stifles employer hiring practices. “While the survey highlights challenges regarding the credibility of labour market institutions, it demonstrates that employers are able to manage an increasingly regulated labour market.”

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Following on from EY’s successful integration in 2008 of 87 countries into one area from across Europe, Middle East, India and Africa (EMEIA), the firm has launched its Africa Business Center™ (ABC), which aims to enhance the effective and efficient links between its geographic reach and areas of expertise. The firm enjoys representation in 33 countries across Africa.