Job Creation and Destruction in S outh A frica

Abstract

Abstract Analysts of the S outh A frican labour market have mainly used household surveys to analyse the labour market. It has been more difficult to explore the labour demand of firms, as a result of limited data availability. We use the Q uarterly E mployment S tatistics survey, an enterprise survey conducted by S tatistics S outh A frica, to explore how S outh A frican firms create and destroy jobs, thereby shedding light on many of the policy questions that are relevant in a high unemployment society like S outh A frica. We find that job creation and destruction rates are similar to those found in O rganisation for E conomic C o‐operation and D evelopment countries. There is little evidence that labour legislation creates rigidities that prevent firms from hiring or firing workers. We also find that larger firms are better net creators of jobs than small firms and that net job creation rates are negative in manufacturing. Our research has important policy implications – particularly for the S outh A frican N ational P lanning C ommission's 2030 plan, in which new jobs are envisaged to come mainly from small‐ and medium‐sized firms. Our research suggests that this scenario is not likely without changes to policy or legislation.

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