Job Creation and Destruction in South Africa

Analysts of the South African labour market have predominantly used household surveys to analyse the labour market. It has been more difficult to explore labour demand from the fi rm side, as a result of limited data from relatively small cross sectional firm surveys, mainly funded by the World Bank. We use the Quarterly Employment Survey conducted by Statistics South Africa that allows us to explore how South African enterprises create and destroy jobs, shedding light on many of the policy questions that are relevant in a high unemployment society like SouthAfrica. We find job creation and destruction rates are similar to those found in OECD 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, consistent with work using household surveys. Our research has important policy implications - particularly for the National Planning Commission's suggestion that new jobs will come mainly from small and medium sized fi rms. Our research suggests this is not likely without changes to policy or legislation. This is a joint SALDRU/DataFirst Working Paper