A global survey has singled
out entrepreneurship as the
single most effective means
of increasing employment –
and it’s gaining traction in
South Africa.
“In surveying the hiring
intentions and recent hiring
practices of a wide range of
young and mature private
companies, we find that
entrepreneurs are indeed
creating jobs,” according to
the Ernst & Young (trading
as EY) Global Job Creation
Survey 2016.
“Of the 2 673
entrepreneurs surveyed,
almost six in 10 (59%) say
they intend to increase
their workforces in the
next 12 months, leading
to an aggregate workforce
increase of 9.3%, up from
47% and 7.8%, respectively,
in 2015.”
And EY has recognised
the vital part entrepreneurs
play in creating capital value
and, with it, jobs. “We know
that entrepreneurship is the
engine of global growth,
creating new opportunities
and new solutions to global
problems,” it said.
It was a theme to which
Kate Stubbs, executive of
marketing at Barloworld
Logistics, referred at the
recent launch of the 2016
supplychainforesight report.
“SA is witnessing a drive
towards entrepreneurship
and self-employment.
“Yet there is a clear need
to develop entrepreneurial,
economic and management
skills to ensure success and
sustainability,” Stubbs added,
noting the specialised need
in SA for entrepreneurial
training.
Improved industrialisation
could create more jobs,
and Stubbs pointed out
that government’s recently
announced incentives to help
grow small, medium and
micro enterprises (SMMEs)
and black industrialists could
boost entrepreneurship in
the manufacturing sector,
creating an opportunity to
develop new skills.
Also, looking at the
latest data from the
Adcorp Staffing industry
employment index (IEI),
Adcorp’s head of strategic
research, Werner Smith,
said that in SA over 60% of
staff were employed by small
businesses employing less
than 50 people, with twothirds
working at businesses
that had less than five
employees.
But sallying into
entrepreneurship is not a
guarantee of immediate
success, and there is
a measurable failure
rate, according to Mike
Herrington, executive
director of the Centre
for Innovation and
Entrepreneurship at the UCT
Graduate School of Business.
He said that SA’s start-up
business rate was notably
higher than its new business
rate of 4.0%, indicating that
start-up firms dominated the
country’s total early-stage
entrepreneurial activity.
“However,” he added,
“less than 4% of start-up
businesses (defined as
functioning for less than
three and a half years) take
on any staff.” And Herrington
pointed out that this meant
that for every 100 new small
businesses, only about 10
additional jobs would be
created.
“On the other hand,” he
said, “established small
businesses (those that have
survived for three and a
half years or longer) are the
ones that create jobs.” These
businesses create 3.2 jobs
on average, and Herrington
added that established
small businesses created
32 times the employment
opportunities that start-up
businesses did.
All this is contrary to
the government’s primary
job creation tactic –
planning large-scale and
not necessarily critical
construction projects that
will temporarily employ
many thousands of largely
unskilled workers. But, as
many foreign governments
employing the same tactic
have discovered, these
projects do not create what
is desperately needed.
That is on-going and
economically sustainable
employment.
You can add to that
the fact that these are
globally what is referred
to as “transformative
times”. Record numbers of
jobs are disappearing as
automation, digitisation or
disintermediation (“cutting
out the middlemen”
in supply chains or
transactions in general)
keep growing. Also, more
and more work is being done
on a freelance or one-off
contract basis.
Survey reveals job creation recipe
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