Recession and financial crisis at SABC take their toll

An employment census carried out by the Gauteng Film Commission (GFC) in the last quarter of 2009 reveals that Gauteng companies within the audio-visual sector are employing new staff on a part-time basis, rather than full-time employment, as well as awarding a substantial portion of work to freelancers.

This raises concerns regarding the industry's ability to create employment opportunities, particularly when coupled with the current recession and financial crisis at the country's national broadcaster, the SABC. Of the respondents, 71.2% and 42.6% indicated the current recession and financial crisis at the SABC issues respectively had impacted their companies.

Explaining the rationale behind the research, which was carried out by Quest Research Service, an experienced and independent research agency, GFC Research Manager, Sebastian Siseko Ndayi, says: "We were looking to get a quantifiable indication of the nature and scope of both direct and indirect employment opportunities that have been created in the film and TV industry in Gauteng, as well as to get a sense of job losses as a result of the current global financial crisis, coupled with the financial challenges affecting our national broadcaster. Further, we wished to report on the representation of women and disabled people in the industry, to ascertain the number of black owned companies as well as report broadly on trends pertaining to the skills required by the industry."

The GFC sees the Employment Census as a benchmark for similar research in the future. The study, which was conducted quantitatively using both a web-based survey and computer-aided telephone interviews, went into field on 29 October 2009 and was out of field on 20 November 2009. Due to attritions, the sample size reduced to 434 (28.8%), which is statistically significant as the minimum sample size at a 95% confidence level and 5% confidence interval is 304 (20%). 97.9% of the 434 companies interviewed are based in Gauteng.

Although prior to this, a number of studies have been undertaken to identify the size and scope of the film industry in South Africa, the GFC felt these studies did not adequately address the size and scope of employment creation in Gauteng. In addition to acting as a centralized industry intelligence hub, the GFC also supports the transformation of the sector into a world-class industry, with a vision to cultivate an environment that allows the audio-visual sector to play a meaningful role in the socio-economic development of Gauteng.

A total of 9 294 people are employed as direct employees of the companies interviewed, with 73.2% being full-time employees, 25.1% being part-time employees, 1.6% interns and 0.2% volunteers. What is interesting to note is that in the 12 month period prior to the survey, the companies reported they had employed 1 692 new employees (excluding freelancers). Of these, 67.9% were part-time employees as opposed to 20.8% full-time employees, revealing a substantial move to part-time employees. This, coupled with the total of 6 880 freelancers appointed over the same period, reveals a trend towards part-time or freelance employment in the sector in Gauteng.

"One can speculate that this is partially due to the impact of both the current recession and financial situation at the SABC and appears to be backed up by the results of the SA commercials production 2009 survey by the Commercial Producers Association which revealed a notable 14% decrease in the number of commercials produced," says Ndayi.

He added that the CPA report also showed an increase in the number of freelancers utilised compared to the previous year, validating the GFC's census.

Although accurate figures were provided for full time/part time employees, according to members of the Gauteng Film Partnership there is a sense that there was an under reporting of the number of freelancers who derive income from the film industry. According to the GFC, this area will be given greater attention this year (2010) when the survey is conducted again.

Retrenchment in the industry, as a direct result of both the current recession and SABC scenario, was significant. Of the 71.2% affected by the current recession, 12.9% (40 companies) stated they had to retrench 452 employees, averaging 11 employees per company retrenched.

Concerning the effect of the financial crisis at the SABC, 42.6% of respondents indicated they had been affected, resulting in the retrenchment of some 167 employees, an average of 12 employees per company affected.

Direct impacts, in addition to retrenchment, included reduced profits/income, lost clients, failure to fund new business, borrowing working capital, work overload, reduced working hours, permanent staff being made into part-time staff on contracts, liquidation of companies, attritions on bookings, shelving of some projects, struggling with maintenance and repair costs and planning to close if no improvement seen shortly.

Interestingly, despite the negative scenario, the majority of respondents to the survey (50.9%) stated that these factors did not affect their training programmes, with only 9.2% decreasing their overall training budget. The overall satisfaction with the skills level within the industry is reflected by 88.2% of respondents indicating that their prospective employees did indeed have the required skills, although certain skills, including communication skills, innovation and creativity, and business management, were perceived to be lacking.

Youth (people under the age of 35) form the vast majority (54%) of direct employees, while 32% of respondents said they offered learnership or an internship programme for school leavers or students. The role of women within the sector is significant, comprising 43.3% of direct employees, while only 1.1% of direct employees are disabled. Transformation is further highlighted by the split of direct employees by race, with 57% Black, 32.6% White, 6.4% Coloured and 4% Asian.

However, while the industry appears to be making relatively good progress from an employment equity perspective (50.6% of companies interviewed were black-empowered), black ownership remains low at 28.6% and is an area that needs ongoing focus.

Commenting on the survey and the ramifications of the financial crises, Richard H Nosworthy of the IPO says: "The IPO welcomes all research done that can help contribute towards a better workplace for us all, and our membership was happy to contribute towards this survey undertaken by the GFC. Sharing information in this way makes us all stronger and better able to fight the crisis that faces the film and television industry. In a survey conducted by the IPO at the end of last year, based on turnover estimates, and other evidence including employment expectations, the IPO analysed the implied impact of the crisis on the capitalisation of the industry. The survey responses on turnover loss were used to estimate the number of jobs at risk due to the crisis. In effect, the information suggested that many jobs would be lost in the sense that people will 'not be hired' in the current year due to the lack of activity. The SABC cash-flow problem caused a serious deterioration in the situation. What cannot be estimated, but is clear, is that the number of companies that fail, close down or go insolvent, will increase with time, if a permanent solution to this problem is not put in place promptly. The more companies that close down, the greater the cost to the economy of re-starting the industry. Our analysis considered the additional costs to the industry over and above the forecast capital at risk. These included the cost of re-training staff, the cost of re-acquiring new equipment (largely imported), the costs of setting up new businesses, and the working capital required to start a new business. If the downturn is not reversed quickly, a theoretical amount of R788 million of total capital would need to be invested in the industry again, simply to return to the level of 2008. A major part of this is the cost of re-training skilled workers."

To read the survey document, click here.