Unemployment and labour market (in)flexibility in South Africa

Tuipende, Deoden (2001-03)

Thesis (MBA)--Stellenbosch University, 2001.

Thesis

ENGLISH ABSTRACT: When South Africa re-entered the global arena, her immediate priority was to search for and affirm her position in the global economy. In this process, South Africa has witnessed massive job losses that compounded the already existing problem of unemployment. South Africa is considered to be one of the countries with the highest levels of unemployment - a fact that has raised a great deal of concern among Government, Business and Labour. This study project examines the functioning of South Africa's labour market with the intention of establishing whether or not it is linked to the problem of unemployment. The study draws labour-flexibility comparisons between the world's most flexible and deregulated labour market (USA) and Europe; and, relatively, tries to find South Africa's position. The study has revealed that there is a relationship between flexibility and employment - countries with flexible labour markets, ceteris paribus, also have high levels of ~- employment and vice versa. The study has also revealed that a culmination of high levels of illiteracy, trade union activities and the new labour laws has resulted into labour market rigidities which are partly responsible for the high rate of unemployment in South Africa. The study has also revealed that any effort by South Africa to adopt the US-style of labour market flexibility should be accompanied by some other policy checks to ensure maximum benefits. This is based on the finding that flexibility per se could have devastating effects for the economy. It is not only the labour market rigidities that are responsible for the current high rate of unemployment in South Africa. Factors like persistent and systematic decline in labour absorption capacity vis-a '-vis persistent and systematic increase in labour supply, decline in economic growth and globalisation claim a lion's share.

AFRIKAANSE OPSOMMING: Met Suid-Afrika se hertoetrede tot die internasionale arena was sy eerste prioriteit om sy plek in die wêreldekonomie te vind en te bevestig. Algaande het Suid-Afrika 'n grootskaalse verlies aan werkgeleenthede ervaar, wat die reeds bestaande probleem van werkloosheid vererger het. Vandag word Suid-Afrika beskou as een van die lande met die hoogste vlakke van werkloosheid - wat groot kommer by die regering, besigheid en arbeid wek. Hierdie werkstuk ondersoek die funksionering van Suid-Afrika se arbeidmark met die doel om vas te stel of dit met die probleem van werkloosheid verband hou al dan nie. Die studie maak vergelykings ten opsigte van arbeidsbuigsaamheid tussen die wêreld se mees buigsame en gedereguleerde arbeidsmark (VSA) en Europa, en poog om Suid-Afrika se relatiewe posisie te bepaal. Die studie toon dat daar 'n verband tussen buigsaamheid en werkverskaffing is - dat lande met buigsame arbeidsmark, ceteris paribus, ook hoë vlakke van werkverskaffing het, en omgekeerd. Die studie het ook bevind dat 'n hoë vlak van ongeletterdheid, vakbondaktiwiteite en die nuwe arbeidswette aanleiding gegee het tot arbeidsmarkonbuigsaamheid, wat gedeeltelik verantwoordelik is vir die hoë werkloosheidsyfer in Suid-Afrika. Die studie toon verder dat enige poging deur Suid-Afrika om die arbeidsmarkbuigsaamheid van die VSA toe te pas, met ander beleidsmaatreëls gepaard moet gaan om maksimum voordele te verseker. Dit is gegrond op die bevinding dat buigsaamheid per se verreikende gevolge vir die ekonomie kan hê. Dit is nie net die onbuigsaamheid van die arbeidsmark wat vir die huidige hoë werkloosheidsyfer in Suid-Afrika verantwoordelik is nie. Faktore soos 'n volgehoue en stelselmatige afname in die kapasiteit om arbeid te absorbeer teenoor 'n volgehoue en stelselmatige toename in arbeidsaanbod, 'n afname in ekonomiese groei, en globalisering is vir 'n leeue-aandeel verantwoordelik.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/52597
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