A SHOCKING 440,000 small businesses shut down in the past five years in South Africa.
This was revealed yesterday in the Adcorp Employment Index for February.
According to Adcorp, small businesses (employing fewer than 50 people) employ 68% of the country's workforce.
Both government and the private sector agreed that most jobs could be created by the small, medium and micro enterprises (SMMEs) but somehow differed in methodology.
Loane Sharp, labour economist at Adcorp, attributed the SMME shut down on the 2009 recession and the country's labour laws, which he described as "particularly onerous" for small business.
The report also revealed that 24000 jobs were created in February compared to 80000 created in January. Most of the jobs - 22000 (91,7%) were created in the informal sector.
In the formal sector, employment growth was at 5,3%, with manufacturing and construction making the most contribution (4,7%), and wholesale and retail contributing 3,5%.
Mining, however, continued to shed more jobs. The sector shed 3000 jobs in February.
This is the first time in more than 12 months that job growth in production-orientated sectors exceeded job growth in consumption-orientated sectors.
Jobs for high-skilled workers grew by a strong 5,3% in February, while the economy's low-skilled equivalent declined by 1,3%.
"Between 2001 and 2011 there was a constant number (two million) of small businesses. The number increased slightly (to 2,4-million) during the economic boom of 2004-2006, but has, since 2006, shrunk by 18,2%," said Sharp.
"Since the boom, about 100,000 small businesses have closed their doors each year, bringing the total number of small business closures over the past five years to 440,000.
"Given that the typical small business employs 12 people (aside from the owner-manager), a revival of this sector could potentially create5,3-million jobs," Sharp added.
He said that in 2001, around 250000 people were involved in starting their own businesses, whereas in 2011 only 58000 people were trying to do so - a decline of 76%.
440,000 firms have shut down
A SHOCKING 440,000 small businesses shut down in the past five years in South Africa.
This was revealed yesterday in the Adcorp Employment Index for February.
According to Adcorp, small businesses (employing fewer than 50 people) employ 68% of the country's workforce.
Both government and the private sector agreed that most jobs could be created by the small, medium and micro enterprises (SMMEs) but somehow differed in methodology.
Loane Sharp, labour economist at Adcorp, attributed the SMME shut down on the 2009 recession and the country's labour laws, which he described as "particularly onerous" for small business.
The report also revealed that 24000 jobs were created in February compared to 80000 created in January. Most of the jobs - 22000 (91,7%) were created in the informal sector.
In the formal sector, employment growth was at 5,3%, with manufacturing and construction making the most contribution (4,7%), and wholesale and retail contributing 3,5%.
Mining, however, continued to shed more jobs. The sector shed 3000 jobs in February.
This is the first time in more than 12 months that job growth in production-orientated sectors exceeded job growth in consumption-orientated sectors.
Jobs for high-skilled workers grew by a strong 5,3% in February, while the economy's low-skilled equivalent declined by 1,3%.
"Between 2001 and 2011 there was a constant number (two million) of small businesses. The number increased slightly (to 2,4-million) during the economic boom of 2004-2006, but has, since 2006, shrunk by 18,2%," said Sharp.
"Since the boom, about 100,000 small businesses have closed their doors each year, bringing the total number of small business closures over the past five years to 440,000.
"Given that the typical small business employs 12 people (aside from the owner-manager), a revival of this sector could potentially create5,3-million jobs," Sharp added.
He said that in 2001, around 250000 people were involved in starting their own businesses, whereas in 2011 only 58000 people were trying to do so - a decline of 76%.
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