The impact of mergers and acquisitions on unemployment in South Africa

Abstract

Mergers, acquisition, and unemployment have been on the increase in South Africa since 1994 when South Africa became a democratic country. Unemployment is a major challenge facing the South African economy. International researchers have found that in most countries where mergers and acquisitions are encouraged, employees of the acquired companies tend to lose employment in years subsequent to those mergers. This research paper aimed at establishing whether South African employees had similar experiences as those overseas. Altogether 42 listed companies that have been acquired in the period between 1996 and 2008 for the value exceeding R500 million were used for the research. An additional 11 companies not undergoing mergers were also selected. The outcome was that acquired companies negatively affect employment. These companies are able to grow their businesses but not in correlation to growing their workforce.