Effects on employment of non-compliance with labour legislation by business in the Fezile Dabi district

MBA, North-West University, Potchefstroom Campus, 2019Small businesses are seen as the driving force behind most countries' economies, as 95% of the world's businesses may be categorised as small or medium enterprises. In South Africa's troubled economy, small business plays a vital role in job creation. It is thus important to understand the mechanisms involved in influencing small business with relation to job creation. In the past, much has been said about labour legislation and its effect on business and how stressful it can be for business to comply with labour legislation. The question needs to be asked if companies that comply with labour legislation employ more people, and whether there is an effect on their annual turnover emanating from this compliance or non-compliance. In this study this issue was addressed by the following research questions: 1. What is the current rate of employment of the businesses in the study population? 2. To what extent do businesses comply with labour legislation? 3. Is there a correlation between the constructs of compliance with labour legislation and the number of employees and annual turnover of the business? 4. Is there a difference between businesses with fewer employees and businesses with more employees regarding the constructs of labour legislation? 5. Is there a difference between the groups of businesses with a low annual turnover and the one with a high annual turnover regarding the constructs of labour legislation? In the early chapters, a literary review was conducted in respect of the main topics in order to explain the theories more fully. The population for the study mainly comprised businesses that made use of business advice from SEDA in the Fezile Dabi district. A specific geographical area, namely the Fezile Dabi municipal district, was chosen. These businesses were invited to participate in a study by means of questionnaires which had been compiled with the aid of the literature review in this study, assistance of experts in the field, the researcher's own intuition and a statistician from the Statistical Consultation Services of the North-West University. The aim was to determine the rate of employment as well as the compliance rate of these businesses in respect of labour legislation. Since annual turnover plays a pivotal role in determining the size of the business, annual turnover was also considered. The data was collected with the assistance of an independent contractor acting as field worker and it was analysed with the help of a statistician. The results of the study shows a strong positive relationship between the rate of employment and compliance with basic labour regulations as well as between the rate of employment and the annual turnover of the business. It was found that the smaller the business, the less compliance with labour legislation there are to be. It may be concluded that micro business and very small businesses are culprits when it comes to non-compliance with labour legislation. This has a definite effect on the rate of employment. Labour legislation is deemed to represent a barrier to employment. Limitations of the study were acknowledged and examined. Financial constraints and the parameters of the mini-dissertation, reduced the study to questionnaires, although interviews could possibly have led to a better perception and understanding of the research questions. Labour legislation needs to become less constrictive and business managements need to comprehend all that is entailed so that they may be enabled to comply. Reasons for non-compliance with labour legislation need to be researched in greater detail. Labour laws need to be properly scrutinised and an effort needs to be made to determine whether they are still relevant in a post-apartheid South Africa. South Africa needs and deserves new jobs, not new laws.Master