​Speaker: Jacomien van der Merwe (Stellenbosch University)

Title of talk: The financial burden when getting employed: Investigating the impact of transport cost on the employee churn rate within the lower skilled labour market.

Abstract:

South Africa has reached its highest jobless rate since 2004 when the unemployment rate rose to 27.7% on 1 June 2017. Unemployment currently is seen and treated as a macro economic problem with government policies focusing on spending on education and skills development training, providing government social grants and enforcing the Unemployment Insurance Fund (UIF) onto employers to assist retrenched workers.

Attention is not given to the micro dynamics impacting unemployment of low income individuals and the barriers they face to find employment and stay employed. By investigating the job seeking process of individuals within the lower skilled labour market it is clear that there is a very high cost to becoming employed and keeping a job, with transport cost being the main contributor to these costs.

The cost of transport thus not only have an impact on the financial health of the job seeker or employee, but also leads to an unhealthy work environment, increased employee turnover, high recruitment cost and loss of productivity to the employer.

This research seeks to investigate the impact of transport cost on job seekers falling within the lower skilled labour market and how it influences the financial health of employees as well as the employee churn rate of companies. It evaluates the welfare effect for solutions to help individuals overcome the cost of seeking employment as well as the first month's transport cost and makes recommendations on how these solutions should be implemented.

The primary research objective is to understand the financial impact of transport cost on job seekers and newly appointed employees who fall within the lower skilled labour market in South Africa.

The sub-objectives are:

1.            To understand how the financial build-up of searching for employment contribute to unemployment in South Africa.

2.            To understand how transport cost contributes to the financial shock of becoming employed for lower skilled / entry level employees.

3.            To understand the impact on employee retention rates when bridging the transport advance for newly appointed employees.

The aim of this research is to help government to align their policies to alleviate the impacts of job search in South Africa for the lower skilled labour market and investigate solutions that will alleviate the financial burden faced by lower skilled employees to overcome the cost of getting employed.

This research also seeks to shed light on how companies can benefit from the provision of a transport advance to their lower income / entry level workers through reduced employee churn, higher productivity of employees and lower recruitment cost.