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Standard Bank
General economic research - Economics Division

Policy commentary: Demand for skills in South Africa

Francis Antonie
Contact: Francis.Antonie@standardbank.co.za

24 March 2004

Copyright: Standard Bank
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Introduction

The Department of Labour's 'State of Skills in South Africa' now before Nedlac identifies three important developments that characterize the structural changes which have occurred in the South African economy, and which have important consequences for the demand for skills, namely:

  • financial and business services have expanded significantly over the last five years;
  • while manufacturing remains a major contributor to the national output, its share contribution has been declining; and
  • mining as a sector shows moderate growth, which has nevertheless been associated with large-scale job losses as mining houses turn to technology (by becoming more capital intensive in their production) in order to improve profitability.
These structural changes in the economy have been widely reported and commented on for some time now. What the Department of Labour attempts to do is to understand the demand for skills within the context of these shifts.


Background

According to the Department of Labour, between 1990 and 1998, formal employment of semi-skilled and low skilled workers fell by 19% (or approximately 700,000 jobs), while employment of skilled and highly skilled workers rose by 12% (or 80,000 jobs). Across the various sectors a similar pattern in labour usage is evident: while demand for low and semi-skilled workers has declined, the demand for skilled and highly skilled workers has increased.

During this period, two important changes occurred in the economic environment namely a process of liberalisation of the economy, and the rapid uptake of technology in all sectors. Both of these developments favoured skilled labour.



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