Does the response by South Africa’s small and medium manufacturing enterprises to employment protection legislation contribute to unemployment

Abstract

The small business sector has been identified as a target by government to reduce South Africa’s unemployment problem. There is existing research that most companies, including small business, avoid taking on new employees to avoid, perceived, stringent labour legislation. This research investigates whether small businesses adopt alternative employment strategies to labour as a means to avoiding labour legislation. The questionnaire was distributed to over 9000 small businesses in the metal and engineering manufacturing sectors. Of the 214 responses only 194 could be used. The results of the research point to a prevailing perception by those surveyed that labour legislation is stringent in South Africa and that small businesses, in their efforts to avoid compliance, chose to employ in the temporary and labour broker employment market. Mechanisation is also an option used by small business to avoid legislation. Legislation is, however, not always the only driver when businesses decide to mechanise.