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Changes in Manufacturing Employment in South Africa, 1970–2004

By Fiona Tregenna | October 18, 2005

This paper was presented at the First Annual Conference on Development and Change Neemrana, India, December 2005<

Excerpt from the Introduction

The objective of this study is to understand the components, as well as the possible causal determinants, of the changes in manufacturing employment in South Africa. Over the past two decades, the level of employment has hovered within a fairly narrow range of approximately 8 150 000 to 8 550 000, with the 2004 figure near the midpoint of this range at 8 388 6973. This stagnant level of employment together with rapidly growing labour supply has brought levels of unemployment of crisis proportions. The “broad” unemployment currently stands at 40.5%, while the “narrow” rate (excluding discouraged jobseekers) is at 26.5% (Statistics South Africa, 2005). While total employment has been stagnant, manufacturing employment has declined significantly. Manufacturing employment is currently at levels last seen in the early 1970’s, although there does appear to be some stabilisation since about 2000. This paper focuses on the relationships between capital stock, capacity utilisation, relative factor utilisation, and employment. Basic decomposition techniques are used to investigate the extent to which changes in employment between 1970 and 2004 can be accounted for by changes in capital stock, capacity utilisation, and relative factor utilisation respectively. Although this analysis does not explain underlying causal relationships, it may be helpful in understanding the various changes that have taken place as well as shedding light on priorities for further research. From a policy perspective, identifying the critical blockages to employment growth may be helpful in focussing key interventions designed to reduce the devastating levels of unemployment that currently prevail.

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Read More: Democracy, Development, Economy, Jobs, South Africa, Africa

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