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Cape Town - South Africa’s graduate professionals recorded a confidence level of just 42% when asked how confident they were that the upcoming budget announcement would address the country's economic growth needs.
This was according to the latest results from the fourth quarter 2014 PPS Professional Confidence Index (PCI) which surveyed over 4 300 graduate professionals.
Finance Minister Nhlanhla Nene is set to deliver his budget speech to parliament on 25 February 2015, with many expecting an increase in taxes to assist with the extra R12bn required to fund this year’s budget.
Not surprising
It was not surprising that professionals did not feel confident that the budget speech would address the economic problems facing the country, according to Macy Seperepere, a manager at PPS.
“It is likely that many graduate professionals fear that the government will look to increase taxes, particularly amongst higher earning South Africans, as a solution to finding the necessary funds to sustain the economy.”
She highlights that of the 3.3 million taxpayers, 1.5 million people contribute 84% of personal income tax collected by the South African Revenue Service, which means essentially very few people are supporting a huge economy.
Average view on economic outlook
The PCI also recorded a confidence level of just 49% when respondents were asked how confident they are about the economic outlook for South Africa over the next 12 months.
This result dropped two percentage points quarter-on-quarter, but more significantly, 15 percentage points since the first confidence level of 64% was recorded for this question in the second quarter of 2011.
It is interesting to note that even though the inflation rate has been brought down to 4.4% in January 2015 from 5.3% in December 2014, people are still not confident in the economy, said Seperepere.
“While there could be a number of reasons why the country’s graduate professionals have low confidence in the economy, load shedding is the most notable at the moment,” said Seperepere. “The implementation of load shedding has left many people uncertain about the country’s future electricity supply.”
Eskom has warned that there will be a “high probability” of load shedding for 62 days during February, March and April.
SA could lose up to R134bn in 62 days of load shedding
Based on National Energy Regulator of South Africa’s findings, which found that the 2007-2008 energy crisis cost the SA economy R50bn, equating to R2.17bn per day, it has been estimated that these 62 days of load shedding could cost the economy over R134bn.
“It is vital that the economic issues facing the country are addressed in order to regain the confidence in the local economy among South Africa’s graduate professionals so that the country remains a viable option for their future,” said Seperepere.
Other results from the survey:
- Confidence that crime rates would improve in SA over the next five years dropped one percentage point quarter-on-quarter to 37%;
- Confidence that unemployment in SA would improve over the next five years increased by one percentage point quarter-on-quarter to 37%;
- Confidence in the future of the healthcare system increased one percentage point quarter-on-quarter to 45%;
