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Skills shortage 'biggest concern'

Johannesburg - South African business owners have been - for four consecutive years - most concerned about the lack of an available skilled workforce, a survey published on Thursday found.

They rated this factor as their major constraint (34%) to business growth, according to Grant Thornton's 2010 International Business Report's (IBR) findings.

"This figure, however, is lower than 2009's 41% which indicates a clear improvement in South African privately held business owners' perception of the nation's workforce and regarding the availability of skills," the survey said.

By contrast, globally, a shortage of orders and reduced demand for products had yet again proven to be the major constraint (39%).

"This is less of an issue than in 2005 when 49% of business owners globally rated this as the most important issue."

Leonard Brehm, national chairperson of Grant Thornton South Africa, said the country's privately held businesses (PHBs) were feeling "a little less constrained" by a lack of skilled workforce.

"This is probably due to the recession causing a slightly reduced demand for skills," he said.

Business owners need to be cautious

By contrast, global PHBs saw this as a much less important issue, Brehm said.

Yet, South Africa concurred with the global trend that overregulation and red tape was the second biggest restrictor to business expansion (all at 32%), the study found.

Worldwide, concern about regulations and red tape increased by 2% compared to 2009's findings (30%).

Overall, the IBR 2010 data for business constraints indicated that globally businesses were more optimistic with the majority of countries less concerned about constraints affecting business expansion.

"This improvement is a clear sign of an upturn," Brehm said.

"With worldwide businesses feeling less constrained than 12 months ago by a variety of factors, PHB owners' focus for the year ahead will shift to long term growth and stability."

Thailand and Russia were the only countries that were more pessimistic this year than they were in 2009, considering all constraints.

Brehm warned, however that, business owners need to be cautious.

"An upturn in the economy is a danger period for PHB owners, with the requirement for additional working capital sure to impact organisations in terms of cash flow."

Brehm said recessions naturally released cash flow because everyone reduced inventories.

"Once the economy turns and demand increases, this process reverses and businesses can be caught short.

"Now, more than ever, is the time to be careful with cash," he said.

- Sapa

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