Does South Africa Have the Potential and Capacity to Grow at 7 Per Cent?: A Labour Market Perspective



The demand for labour and subsequent rate of employment is directly related to the rate of
economic growth due to the profit-maximising behaviour of firms. Policy measures to raise the
economic growth rate to substantially higher levels are, therefore, of prime importance over the
longer term, if job creation objectives are to be met. A more rapid rate of job-creation will
simultaneously alleviate poverty and reduce differences in income distribution and thus materially
assist in socio-economic reform. Export-led production will imply the following labour market
adjustments:

1) An increasing demand for skilled labour relative to unskilled labour.

2) Cost-effectiveness of production in an internationally competitive environment.

3) The employment of technically advanced methods of production.

4) Improved management techniques.

5) An efficient and cost-effective firm-union negotiation framework.

6) Flexibility and stability in the labour market.

7) Widespread involvement of small and medium-sized business firms.

The aforementioned necessitate the training and retraining of workers and management, the co-
ordination of technology requirements, higher productivity, improved efficiency in wage-setting
and bargaining.

Policy approaches to improve the efficiency of the labour market

The labour market, like all other markets in the economy, should have the capacity to adjust to
any external (and internal) demand and/or supply shock. In other words, to fully exploit the
opportunities of world markets, the domestic labour market should be able to rapidly discount
conditions. The economy, workers and employers will all benefit from efficient labour markets.

The efficiency and flexibility of labour markets can be improved if attention is given to:



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