We recently commissioned a study to understand if the technology that we provide to businesses, to help workers access information and knowledge more easily, could have a broader impact on the South African economy. Conducted by leading South African economist Dr Adrian Saville, the findings were significant, showing that a small improvement in labour mobility could potentially have huge economic benefits for South Africa.
An increase of as little as five per cent in the mobility of the workforce, information and knowledge, through improved transport links across South Africa and a better broadband and mobile communications infrastructure, could mean that the average GDP per capita in South Africa increases by 40 per cent from R10,500 to R14,670 per year.
The study highlights that mobility is an incredible catalyst for economic growth. Even modest improvements in labour mobility – which can be achieved by improved public transport or technologies such as super-fast broadband and a 4G infrastructure – can add several percentage points to GDP growth. This in turn will reduce specific skills shortages, raising entrepreneurial activity and redressing information gaps.
Based on experiences and evidence from a survey of 140 countries, a five per cent improvement in the mobility of South Africa’s workforce, coupled with a similar improvement in access to information and knowledge, would facilitate changes in the structure of the economy that could drive down unemployment by as much as 40% over a ten to twenty year period.
This could assist the government with meeting its employment targets and put South Africa’s employment rate at a similar level to other countries, such as Tunisia, Columbia or Turkey. In another respect, improved information mobility, brought about by technology, has socio-economic benefits including better access to education and healthcare, increased movement of capital as well as a flow of information.
Technology plays an important role in boosting mobility, including that of people and information. One of the largest contributors of mobility is technology and how technology assists people in changing the way they work.
Interestingly, macro-economic factors such as movement of trade and capital have less of a direct impact on the local economy than micro-economic factors such as the movement of people and information. High levels of mobility have been shown to foster entrepreneurship which in turn is a major engine for economic growth. This is because increased mobility enhances an entrepreneur’s access to information and training, skilled employees, capital and new markets.
When compared with Chile and Malaysia, both of which have smaller populations than South Africa but higher levels of mobility, the number of small businesses is considerably higher. Whilst statistics relating to the number of firms are notoriously complex, recent studies find Chile is home to 17 million people and 700,000 firms and Malaysia is home to 28 million people and 900,000 firms. By contrast, with a population of 50 million people, South Africa has 600,000 small businesses. The implication is that, an increase in support for entrepreneurs – which is a direct consequence of higher mobility – could contribute strongly to the creation of businesses, employment and income. On this front, one study on the South African economy estimates that approximately 90 per cent of all new jobs between 1985 and 2005 came from small- and medium-sized enterprises. Entrepreneurs need more support in terms of access to information and technology. An additional one million small firms could create up to five million jobs.
Overall, South Africa was rated as ‘average’ in its mobility, in comparison to other countries globally. Although this is not necessarily a negative rating, it does mean that there is room for South Africa to improve significantly. In other developing countries such as Malaysia and Chile, a concerted focus on improving mobility has led to considerable economic benefits.
We were astounded by the degree to which the study highlighted the direct causal link between creating a mobile workforce and the economic development of a country – and are excited about the potential opportunities this offers.
About the Study
For the purposes of this study, mobility is defined using the framework set out by Pankaj Ghemawat (2011) in World 3.0: Global Prosperity and How to Achieve It. Mobility is considered to be made up of macroeconomic elements – including the movement of goods, services and capital – and microeconomic elements – including the movement of information, knowledge and people. Using this definition, economic mobility for 140 countries was measured using World Bank and International Monetary Fund data over a period of 15 years (1997-2012) to give a data set of 2,100 observations relating to country mobility, individual income and employment levels.