Report of the employment conditions commission on the investigation into a sectoral determination for the forestry sector

Sector Profile

Over the last decade or so we have witnessed a spectacular growth of the sector. It is generally accepted that the hospitality sector is one of the fastest growing sectors of the economy. In March 2009, the CEO of Tourism Business Council of SA during a press conference said, 'the travel and tourism industry is one of the world’s highest priority industries and employers, the world’s leading growth sector, one of the fastest growing economic sectors globally and a sector whose business volume equals or even surpasses oil exports, food products and or automobiles.' The CEO continued to point out that, 'in SA the sector generates R179 billion of economic activity and 445 000 jobs through direct employment and a total of 1 011 000 jobs, representing 7.6% of total employment.'

In anticipation of future opportunities the Development Bank of Southern Africa (DBSA) announced at the 2009 Tourism Indaba that it intended prioritizing tourism projects locally and in the Southern African Development Community (SADC) region with development finance to invest in tourism infrastructure, since commercial finance institutions might be more cautious in the context of the economic downturn.

Similarly, the Minister of Tourism remained positive about the prospects for the sector in the coming period. He claimed that the domestic market remained strong despite the downturn, with 13, 9- million South Africans spending R25, 8bn on local travel. According to the 2010 research by the World Travel and Tourism Council report on SA the overall tourism sector’s share of the economy rose to an estimated 8, 5% of gross domestic product last year from 8.1% the year before. It was estimated that tourism’s total contribution to the economy was R194, 5bn, a 19% rise, with an estimated employment of 1, 04-million people in 2009.

Tourism has become the lifeblood of the South African economy and has injected R350-billion in foreign direct spending since 2003, according to Engineering News (July 2009). Last year, the sector contributed 8, 4% to the country’s gross domestic product. While growth in the global tourism industry came in at 1, 3% last year, South Africa fared better, at 5, 5%. A significant indicator of growth in this sector is that it is estimated to have double in size since 1994. According to Stats SA January 2010 report, tourism contributed eight percent of South Africa's gross domestic product last year and provided employment for 1.2 million people.

According to the web-based Bluechip Journal, 'despite the global economic downturn, it seems that the hospitality industry is booming in South Africa. The listed Private Equity investment company Dale Capital Partners (DCP) identified the hotels and leisure sector in South Africa as a core component of its current investment strategy. It has taken the step of increasing the level of investment in excess of R200 million. Despite the global economic slowdown the hotel sector in South Africa continued to record significant growth. In South Africa the hospitality sector continued to reflect an increase in numbers of staff for the first quarter of 2009 and further, several high-demand events should add further yielding opportunities, not the least of which is the 2010 FIFA Soccer World Cup, which is estimated to contribute in excess of R51.1 billion to South Africa’s gross domestic product.'

Bluechip Journal further claimed that despite the current global financial crisis, the hotel and leisure sector in South Africa would continue to record significant growth because South Africa had established itself as a MICE (Meeting, Incentive, Conference & Event) destination.

The doubling of tour operators in the past five years, while expansion in hotel rooms and rapid expansion in non-hotel accommodation as well as product proliferation generally, are indicative of the current growth phase of the tourism industry.

According to the THETA 2007 sectoral plan, there are more than 40 430 enterprises in the hospitality sector, most employing fifty or less employees. According to Tourism Business Council of South Africa (TBCSA), SMMEs account for almost 90% of employment opportunities in the tourism sector, employing less than 50 people.

Thirty percent of labour in the hospitality sector is classified as unskilled. While there has been a steady increase in the number of employees in this sector, general workers dominate the industry by 72%. Most of the employment opportunities remain labour intensive.

Employee profile within the sector

According to research by NALEDI, more than 70% of workers in the sector are not covered by collective agreements or Bargaining Councils.

According to THETA, Conservation and Tourist Guiding together with Hospitality are the sectors that employ the highest percentage of black people, with more than 70% of the workforce being black and majority of them in lower skilled occupational categories.

THETA also points out that business outsourcing has become a major force in the sector and this trend is impacting on wage levels, job security and other benefits. Services such as cleaning, babysitting, training, security, payroll, information technology, call centres, catering and others are being outsourced and more than half of hotel staff is not employed by hotels but by different service providers. The THETA analysis reveals that the majority of employees in the hotel trade are still in lower job levels, either as service workers (54%) or general workers (18%), constituting a total of 72%. Employment growth was estimated at 7.2% in 2005, 14.3% in 2006 and 10.6% in 2007. As far as ownership patterns are concerned THETA provided the following information on Hospitality ownership patterns: black (21%) and white (79%).

THETA in its report identified the following sources contributing to atypical trends of employment in the sector:

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  Outsourcing
  
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  Operational nature – 24/7
  
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  Seasonality of the sector – fluctuation of demand for services
  
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  Cost reduction
  
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  Increased flexibility
  
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  SMME’s
  
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  Labour broking
  

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  Franchising
  

As in the previous research report by HSRC, the employment patterns still reflect 85% of employees being employed by enterprises employing less than 50 workers. Eighty percent of employees are those employed by employers employing less than ten employees and 72% are black.