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2007 AEC - Examining the level, mix and deficiencies in skills - upgrading among South African manufacturing enterprises in the late 1990s; skill - upgrading as basis for enterprise development and for addressing equity issues

15-Nov-2007

As the South African economy get more integrated into the global economy, the competitive restructuring of local firms will be critical to their survival and future growth. Consequently, skills and technological upgrading will be crucial in upgrading the international competitive advantage of local firms. Enterprise-provided training is one means used by local firms to continuously upgrading their knowledge bases, increase their competitiveness, and enhance employment growth over time. The objective of the study is to examine the effectiveness and deficiencies of different types of skills-upgrading or training strategies used by manufacturing firms in South Africa. The effectiveness of such upgrading efforts is important at both firm- and government policy-level. One means to upgrade the absorptive capacity of the country’s labour force is through enterprise training. In the context of South Africa’s racially-based past, the focus and content of enterprise training has a wider social agenda. The majority of unskilled and semi-skilled workers are black. Enterprise training is expected to partly contribute to re-addressing the legacy of past Apartheid discrimination in access to skills and employment opportunities. Raising the skillbase of such labourers is expected to increase their effective participation in the labour market, reduce their venerability to losing employment, increase their relative wages over time, and help address issues of rampant poverty in the African population group. The study examines enterprise training in South African (SA) manufacturing firms, using various sources of secondary data. Despite much progress since 1994, the research questions whether trends and features of skill-development in SA’s manufacturing firms are able to promote equity issues, taking into account the backlog in skill development of black South African workers. Black South African overwhelmingly occupy most of the semi- and unskilled level occupations – a legacy of South Africa’s Apartheid past. They are at the bottom of the skill-ladder in most firms. Addressing ‘Equity issues’ will require such employees’ training contribute to increasing their (future) wage earnings. This study provides no evidence that such a trend was taking place. The study is pertinent, since efficient development of competitive, dynamic and growing skills and enterprises is critical to sustainable job-creation and economic growth. With South Africa’s ‘broad’ unemployment rate hovering close to 40%, sustainable job creation is a pre-request to poverty reduction. Tentative Public policy implications of the study findings are outlined.

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