The South African labour market and the incubation of small businesses in South Africa

Abstract

Since April 1994, the South African Government and the trade unions have been working together as a means of realising sustained economic growth and development, job creation and the alleviation of poverty among the unemployed youth. The uneasy relationship between the South African Government and the trade unions has been characterised by tensions and differences in strategy. The implementation of the South African National Development Plan depends on the presence of a smooth working relationship among all relevant stakeholders. The global nature of the South African economy has prompted economists in South Africa to call for the relaxation of labour laws as a means of attracting foreign direct investment. The objective of the study was to assess the existing conditions of labour in South Africa as well as the impact of labour-related conditions and legislation in South Africa on the South African economy.The rate at which the economy has grown since April 1994 has been significantly smaller than the rate at which jobs had to be created in order to absorb the unemployed into the economy. This paper investigates factors that affect the duration of employment and job mobility in the South African labour market by using the South African Labour Force Survey data set of 2007. The study shows that union membership and ownership of pension funds are negatively associated with job mobility. The study has found that workers (cetaris paribus) who belong to pension funds are, on average, twice as likely to stay in their jobs. The results for union members are similar. The study shows that job mobility is significantly influenced by age, race, level of skills training, level of household income and province of residence. The results show that the Province of Mpumalanga was most significantly affected by job mobility. The provinces that were least affected by job mobility were the Western Cape, Gauteng and Limpopo in decreasing order. The study provides an exploratory analysis of the labour market in South Africa, and proposes lessons for remedial actions to policy makers and planners. Feasible recommendations are made to South African policymakers and planners based on the findings of the study.