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Informal sector creates more jobs

The informal sector created 12,722 jobs in the last quarter of 2013.

Spaza Shop.

CAPE TOWN - The informal sector has created more jobs than the formal sector in the last quarter of 2013.

Adcorp has released its employment index which show that during the last two months the economy created 23,861 jobs in the formal and informal sector.

Most of the jobs were created in the informal sector.

Edcorp’s labour economist Loane Sharp told 567 CapeTalk that small businesses were playing a major role in the economy.

“Small businesses employing less than 50 people account for nearly two thirds of total employment. In comparison, JSE listed companies represent just nine percent of total employment which give you a clear sense of how important are small businesses.”

However, he says some small businesses do not obey the law.

“The other part of the informal sector is small businesses which don’t register for income taxes and who evade labour laws and regulations.”

Sharp says collective bargaining has become a highly dysfunctional part of the labour market.

“The bargaining council has the power to set minimum wages for entire industry sectors. And the problem with those bargaining councils is that they’ve been hijacked by big businesses and organised labour and they determine wages that are unaffordable for small businesses and in the process they force out competition.”

The Adcorp index also revealed that 359,00 highly skilled South Africans have returned from foreign work since the global recession in 2008.

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