FIFI PETERS: South Africa is losing quite a number of highly skilled professionals. I suppose this is not bad if these professionals are finding better opportunities or perhaps a greener pastures elsewhere – but it’s not so great for the economy because this is a loss of individuals who could have otherwise contributed more to Sars’s kitty, and it has a potential impact on jobs.
But we’re going to speak about the reasons further with Izak Smit, CEO of the Professional Provident Society, or PPS. Izak, thanks so much for your time. I recall the skills flight from South Africa – in fact, from the African continent – being a problem for some time, but would you say that things have become better or are things getting worse?
IZAK SMIT: Hi Fifi, thanks for inviting me to join you tonight. Look, it has its moments, sometimes more, sometimes less. At PPS perspective our members are all professionals with professional qualifications, and we are always quite interested in why they might leave us. We are very interested in how we can keep our members on board. When we ask them the reason for leaving, what we’ve seen actually fairly consistently over time is it’s about one in five cite emigration as a reason. So about 20%, 25% say ‘I cannot stay a member any more because I’m going overseas. I’m leaving the country’.
FIFI PETERS: Why are they leaving the country? Is this greener postures or have they lost hope in the opportunities here?
IZAK SMIT: We don’t go deeper. But I don’t think it takes a lot of rocket science to figure out why people look. Sometimes it’s for positive reasons. They’re not running away from something; maybe it’s a smart career move – and some of them do come back, I must just add. So it’s not only one-way traffic.
But there are reasons, unfortunately, negative reasons – for example taxation. What is important to professionals over the years that we’ve worked, are things close to them like education, education of their children. Also personal safety and security and health. Those are the things that sometimes from a social perspective are the reason. But then for many of them obviously it’s about careers and it’s sometimes also about lifestyle.
What we also find is professionals don’t necessarily say where they are going. They often choose cities, not even countries. It’s opportunities in a particular city that they might move to.
FIFI PETERS: Which cities stand out the most?
IZAK SMIT: Traditional South African expat places, some of the Anglo-Saxon countries – the UK, Canada; and Australia is a big one. We also a good few years ago started a business, PPS in Australia. That’s a very big one for South African professionals. New Zealand as well. These days the world is their oyster. It’s sometimes the far East, it can be the Americas. I think it’s perhaps fair to say the Western traditional Anglo-Saxon countries these days. It’s often interesting places everywhere.
FIFI PETERS: Would you say that the exits of late could have also been boosted by the fact that in 2020 most people would have had to put their emigration plans on ice because of the lockdowns, everyone being brought to a standstill; and when there was some sort of easing of the restrictions people could go out again. Would you say that the pandemic and the lockdown has had an impact on the exits?
IZAK SMIT: Gosh, we saw that in our statistics as well – 2020 was slower and then it picked up again this year. But, Fifi, talking about the pandemic, the one thing all of us have experienced is just this whole digitalisation. These days many professionals in their professions, I always say, ‘ship’. But it’s not assets. They can basically work from anywhere.
What we start to see more and more is professionals in South Africa doing work for overseas businesses, but also people working overseas doing work for South African businesses. You can basically base yourself not necessarily in South Africa, but still work for a South African business.
FIFI PETERS: Izak, you said around 25% of your members have cited emigration as the reason for leaving the Professional Provident Society. What about the other 75%? What have their reasons for exiting been?
IZAK SMIT: There are a couple. Sometimes it’s just the change in a particular need. That’s also where our financial advisors come in. Maybe they might not need the cover any more – that’s often a reason. Obviously people closer to retirement might not need certain protection any more. Sometimes, sadly, for financial reasons. Even professionals are not immune to economic forces, and a lack of funds is a result of that. There are also various other reasons why the cover gets cancelled.
FIFI PETERS: What then is the potential impact for the economy and jobs?
IZAK SMIT: Yeah, that is a very sad one. If you’ve got emigration, particularly of your professionals, that’s very bad for the economy. It’s bad for the tax base. As we know, we’ve got a very skewed Gini coefficient in South Africa; very few people pay income tax. We don’t want to lose those people who would go and pay their tax elsewhere.
But the impact is wider. It’s job creation. You don’t lose only that particular job; remember professionals create jobs all around themselves. There are people in their practices, people at home, there are gardeners. They always say they pay a portion of so many other people’s income. A typical professional might need a dentist at times, a GP, a mechanic, a tax advisor, and so forth. There’s a portion of those people who are going to lose all that income. So it’s not only that single job that you lose, it’s the multiplier effect of other jobs that’s also impacted.
FIFI PETERS: Izak, I wonder if there’s an opportunity to take the survey further and find out exactly why people are choosing to emigrate, because maybe, when we understand the reasons why, we can bring a call to action to help offset this, and help reduce the leakages in the tax base that you have just described.
IZAK SMIT: Yes, Fifi, we from time to time do have these surveys. In fact, we did quite a big survey in 2019 among our members around the NHI (national health insurance). Also our message here to policymakers is to be very careful in what you do, how you roll out certain things. In that particular survey astonishingly about 70% – it went to more than 3 000 people – said the ‘why’ is something like the NHI, the way it’s implemented that might impact decisions where to work, which country to emigrate to, that kind of thing.
FIFI PETERS: Izak, we’ll have to leave it there for now. But thanks for bringing our attention to something that is quite important. I hope the decision-makers are listening and thinking about how they can make it more conducive for some of these skilled professionals to stay and contribute more to the economy, to the tax base and also to job creation.
That was Izak Smit, CEO of the Professional Provident Society.