Job Creation and Destruction in South Africa

Abstract: 
Analysts of the South African 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. In this paper published in the South African Journal of Economics, Arrow, Kerr and Wittenberg (2014) use the Quarterly Employment Statistics survey, an enterprise survey conducted by Statistics South Africa, to explore how South African firms create and destroy jobs,thereby shedding light on many of the policy questions that are relevant in a high unemployment society like South Africa. The authors find that job creation and destruction rates are similar to those found in Organisation for Economic Cooperation and Development 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. Their research has important policy implications – particularly for the South African National Planning Commission’s 2030 plan, in which new jobs are envisaged to come mainly from small- and medium-sized firms. This research suggests that this scenario is not likely without changes to policy or legislation.