The skill intensity of export growth in South Africa

Abstract

South Africa has consistently attempted to increase its export base to increase its market share and increase its trading partners in other parts of the world. This is done in an effort to grow the economy and with the hope to increase employment in the face of job shedding in the local economy. What is not clear is the implication of export intensity on labour skills. Skills are in different categories, low-skilled, semiskilled and skilled; which interplay in the market intensity continuum. There is need to take all three into account, simultaneously to get a better understanding of the skills intensity of export growth. Given the simultaneous nature of the model, this study uses the three-stage least squares (3SLS) method to estimate the demand for skills using a linear specification when examining the correlation between export performance in the four biggest exporting industries and the skills structure of South Africa. Resulting from the study is that South Africa is skill intensive in all the main exporting industries. In the manufacturing sector, semiskilled workers are employed alongside skilled workers. This study suggests that skills development should be a continuous and active process.