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MANCOSA ASSIGNMENT COVER PAGE
Surname: Mdhlalose
ID.Number: 8902185188082
Number of Attachments: 1
MANCOSA
MANAGIANI COUOEG S04114411.4 kriUCA
ASSIGNMENT FEEDBACK
MODULE : MANAGERIAL ECONOMICS
PROGRAMME : MBA NQF 9 YEAR 1
DATE
MARKER : H MATSONGONI
I
MARK MARK
. Question 1.1: Explain what is meant by economic growth in the context of the given case study.
Question 1.2: Using the given case study, critically discuss the sources of economic growth for Rwanda post 1994 genocide. Use
evidence from the case study to support your discussion.
Introduction sources of economic growth (generic demand and supply sources)
Effective leadership.
Prudent macroeconomic management.
Governance scorecard attracting foreign direct investment (FDI).
Effective use of foreign aid (examples).
Sound fiscal and monetary policies.
Strong anti-corruption campaign. 1 r2 20
* Vision 2010.
Participation of the private sector.
Agriculture.
ICT 2300km nationwide fibre-optic cable.
There is great need to balance the discussion with relevant examples. (These are not exhaustive).
Conclusion
TOTAL MARKS (Question 1) - i. 25
Question 2.1: Critically discuss what the government of Rwanda used to grow out of poverty and which of these strategies do you
think had the greatest:influence towards the reduction of poverty.
Introduction - prepare the examiner on what to expect (poverty)
Discussion should focus on:
Models to reduce poverty. i ",
Good governance.
I'
Strong anti-corruption campaign.
Clear economic vision buoyed by the effective use of foreign aid.. 15
The above analysis should be linked to the evidence from the given Case Study.
Relevant examples to support the discussion as well can be used.
(These are not exhaustive)
Conclusion
Question 2.2: Discuss some of the main problems facing Rwanda post genocide. -
titioutootOugaigiggift, .
Introduction
Availability of raw materials.
Technology. 10
Other inputs.
Regulation and legislation.
Conclusion
TOTAL MARKS (Question 3) 25
Qustii e 6
0,
Question $100kiii-6.4Wookootwit(40006iiiii.14:00:
GENERAL COMMENTS
Student's answers will vary, however students should refer to relevant theory and its application surrounding the areas being assessed. Marks in the
assignment are primarily awarded for the application of the relevant theory to the requirements of the assessment. Merely reproducing theory is
insufficient at postgraduate level. The ability to undertake and reflect on research is a key component to the assessment. The assignment has been
assessed in accordance with the following general criteria: Presentation, Organisation, Analysis and Application of theory, Relevance, Coherence
and References.
The expected response to the assignment is outlined above. However, the depth of the theory is such that students may provide answers that may
vary. The assignment is therefore assessed by the marker in terms of the relevant theory and marked accordingly. The responses provided by
students may not in their entirety be reflected in the marking guide, but could be a satisfactory response to the question. Students are given full
reco:nition for this.
AAANCOSA
ASS1GNIVIENT
Surname Ividhlalose
Assignment Number 1
Tutor's Name
Mpumalanga
1034
E-Mail 1281150students.mancosa.co.za
Declaration: I hereby declare that the assignment submitted is an original piece of work produced by myself.
This is to certify that this assignment entitled: "The reduction and the upswing of Apple
Inc.: influences impelling the firms progression." submitted in partial fulfilment of the
requirement for the award of the degree of Master of Business Administration (MBA) in
Strategic Management to MAN COSA Graduate School of Business, is my own work:
List of tables vi
SECTION A
1. INTRODUCTION 1
2. OVERVIEW OR BACKGROUND 7
2.1 STRATEGIES THE GOVERNMENT OF RWANDA USED TO GROW OUT OF POVERTY
SECTION 13 12
4. COLLECTIVE BARGAINING 17
5. CONCLUSION 24
Eighteen years after the genocide that made Rwanda international news, but left abandoned by the
west, the country has achieved a miraculous change of fortunes. Rwanda has been described as a
country, which has successfully existed from violence. Rwanda has not experienced serious internal
insecurity since the events of 1994 and a minor insurgency in 1997-8.
This report/assignment aims to; explain what is meant by economic growth in Rwanda case.
Discuss the sources of economic growth for Rwanda post 1994 genocide. Discuss the strategies
used by the government of Rwanda to grow out of poverty. Discuss the main problems facing
Rwanda post-genocide, Focus on Gallo Record Company in South Africa and will discuss
unemployment in South Africa.
It has been more than 20 years since the demise of Apartheid in 1994; still unemployment remains
persistently high in South Africa. Since 1994, the economy has been showing signs of growth but
unemployment remains high. The official unemployment rate in South Africa is at 26.7% in the first
three months of 2016, but the expanded definition of unemployment is about 10% points higher at
36.3%. Depending on the definition, there are 5.7-million or 8.9 million unemployed South
Africans.
List of figures
Figure 1: Unemployment in a perfectly competitive labour market with the presence of minimum
wage. 19
Figure 2: Demand and supply for labour market conditionsError! Bookmark not defined.
22
Economics: is the study of how best to allocate scarce resources among competing uses (Schiller,
Economic Growth: is the annual rate of increase in total production or income in the economy (this
definition is qualified in two important aspects, 1st the production or income should be measured in
real terms, 2' the figures should also be adjusted for population growth). This means that economic
growth should be expressed on a per capita basis (Mohr, Fourie and Associates, 2008).
Factors of Production: resource inputs used to produce goods and services, such as land, labour,
Gross Domestic Product (GDP): the total value of all final goods and services produced annually
Strategy: is a plan, method or series of actions designed to achieve a specific goal or effort (Louw
Compact Disc: is an optical media storage device, originally developed by Phillips and Sony and
L INTRODUCTION
Rwanda's apparent stability depends in large part on the government's main ruling party, the
Rwandan Patriotic Front (RPF), which won Rwanda's civil war and ended the genocide, and
in particular increasingly on its present leadership under president Paul Kagame. Together
they have charted a path for Rwanda of their own making, and are understandably sensitive
to outsider views on their choices given international indifference to the country's plight in
1994.
Compact Disc is a digital data storage format, co-developed by Philips and Sony. The
format was initially developed to store and play only sound recordings but was later
modified for storing of data Compact Disc Read-Only Memory (CD-ROM).
As South African economy has been showino- -noderate, positive growth in the past 20
years, employment growth remains slow lerefore one can conclude by saying that
employment growth is not rapid enou to absorb the new labour force entrance, as a result
this lead to high unemployment rate.
Rwanda, a former Belgian colony, grew s economy 8% in 2012, making it the strongest
performer in the East African Co .frnitni (EA , the regional intergovernmental
organization of Burundi, Kenya, R anda, Tanzania and Uganda, and one of the fasted-
growing frontier markets in the wot d of today.
Economic growth is defined as an increase in the production and consumption of goods and
services, economic growth occurs when there is' an increase in the multiplied product of
population and per capita consumption, and often and generally indicated by increasing
real Gross Domestic Product (GDP) or real ross alidnal Product (GNP). Schiller (2008)
defines economic growth as "an increas in output (real Gross Domestic Product (GDP))
on expansion of production possibilities."
Economic growth in Rwanda is defined in terms of an increase in GDP per capita increased
from US$ 212 in 2001 to US$ 540 in 2010 and to US$ 644 in 2012. In 2008 more than
3000, firms registered, up from average of 700L....tipevious
ir years. As of 2009 the number
rose to 6905 firms and in 2010 the government managed to register 18 447 new businesses.
This shows a notable economic growth in Rwanda as depicted by a rise in figures of
registered firms annually.
In 2012 the Foreign Direct Investment (F 1) increased by 50% to US$ 159.8 million.
Rwanda continual to relish investor conf ence from foreign investment that came from
Singapore-based Nandan Agro-processing industries Ltd, and South African cement
manufacturer, Pretoria Portland Cement PPC. Rwanda's strong GDP growth is driven
largely by the service sector, which accounted for 48% f GDP growth in 2012. Tourism
became the largest foreign exchange earner for Rwanda securing US$ 281.8 million in 2012,
an increase of US$ 30 million compared to 2011.
An economy's growth rate is determined by the rate of incr ase in the use of capital, labour
and other factors of production, and the efficiency w th which these factors are used
(Faulkner & Loewald, 2008). Rwandan economic gro h case offers an instance of where
growth trends improved due to political change, in this case a transition to democracy.
According to Rensburg, McConnell and Brue (2011:387) society can increase its real output
and income in two fundamental ways: by increasing its inputs of resources, and by
increasing the productivity of those inputs. Increase in land, labour, capital and
entrepreneurial resources yield additional output.
Good governance: Rwanda's miraculous recovery was its effective leadership, through
Paul Kagame as the nt of Rwanda managed to curb bribery successfully,
instituted rule of law and reduce treet crime in conjunction with his government. Mr
Paul Kagame as the leader of wandan Patriotic Front army ended the genocide when he
took control. As a result, corruption is on the decline therefore the country enjoys fast
growing economy.
Gacaca courts: were presented as public centred public trials allowing victims to
confront accused perpetrators, if found guilty, the perpetrators were then taken to such
punishments as repairing horn , caving out agricultural terraces or tending the fields of
the victim's family. These punishments focused on rebuilding the country of Rwanda, as
a result agricultural production pereased and this have a positive impact on the
country's GDP.
Effective leadership: Rwanda's commitment to stamp out corruption in its quest to lift
the country out of poverty has ear d gnition from the anti-corruption watchdog,
Transparency International (Ti). w3pdis listed as the least bribery-prone country in
East Africa, therefore this firmly inderlines the pivotal role of effective leadership that
lifted Rwanda out of poverty and placed it on the path towards middle-income status.
These policies managed to maintain a robust growth in the country. the government has
financed some of the aid shortfall, through increased domestic borrowing, which spurred
economic growth by 8% in 2012, higher than the 7.4% growth rate projected in world
bank's July 2012 Rwanda economic update, which was prepared prior to the shortfall of
aid.
> Economic Development and Poverty Reducti n Strategies (EDPRS): the establishment
of the EDPRS acted as a source of economL growth for Rwanda. This strategy's focus
was aimed at growing the private sector increasing exports, urbanisation and rural
development, increasing agricultural prod uctivi , creating jobs with due respect to
youth, and improving efficiency in servic livery in both public and private sectors.
All of these aspects were aimed at ensuring the national economic growth.
> Private sector: Private sector development acts as a source of economic growth in
Rwanda. Private sector development is to be spearheaded by ntrepreneurship towards
attaining economic growth in Rwanda. it is th national o ective to have a private
sector led development. The ultimate goal f4e reform p ramme is a private sector
that promotes economic growth and job creation. This c d be seen by an increase in
the number of registered private firms annually with 18447 new businesses in 2010
which was nearly about to achieve the set target of 20 000 for year 2010.
Broadening of the services sector: The services sector of Rwanda contributed much to
the national economic growth. The sector accounted for 48% GDP growth in 2012 with
tourism having the largest foreign exchange earner with us$ 281.8 million in 2012. This
made the country to si1l.y diversify from commodity export to a successful
service offering. Other secto which brought a considerable contribution in economic
growth emanated from ommunications, education, public administration, storage and
transport.
Resourceful labour market: The existence of an efficient labour market acted as a source
of economic growth in Rwanda. With an efficient labour market, it means that there is
an equilibrium wage rate and equilibrium quantity of labour demanded and supplied.
Market factors determine he wage rate, which implies paying for what has been
produced. This promo production as more labour demanded means more production,
thereby promoting economic growth in Rwanda.
> Resources: Rwanda's stroll, sources of economic growth are driven by service sector,
which accounted for 4 of GDP Growth in 2012. Tourism has been the largest source
of economic growth by the largest foreign exchange earner for Rwanda, securing US$
281.8 million in 2012, an increase of US$ 30 million compared to 2011.
> Rwanda has shown how to lift itself out of poverty and failure through reconciliation,
unification as well as defined and clear economic growth goals. Rwanda sources of
economic growth regarding the imports to the country were China (12.7%), Uganda
(14.1%), Kenya (8.3%) and India (8%). These countries acted as source of economic
growth to Rwanda as they import goods and services to the country.
> Foreign Direct Investment (FDI): FDI in R anda forms one of the sources of economic
growth. The Rwandan governance scorec rd acted as a tool of attracting foreign direct
investments. Factors such as transparenc , and accountability, good quality of service
deliverance, economic and good corpo t governance attracted foreign investors.
Political rights and civil libertii in wanda indicate democracy by attracting FIN
since they are certain that their rights and interests are secured, therefore FDI's in
Rwanda increased by 50% to USD 159.8 million in 2012 due to a deepening investor
confidence. These foreign investments came from Singapore based Nandan Agro-
processing industries Ltd and South African cement manufacturer, Pretoria Portland
Cement.
1
Rwanda's governance reforms, anti-corruption and vision 2020 initiatives have paid ft,
evidenced in the World Economic Forum's (WEF) global competitiveness report 2012-
2013, which ranked Rwanda 63 among 144 coun ries, and third among sub-Saharan
African countries, behind South Africa and Mauritius
Rwanda's commitment to stamp out corruption i its quest to lift the country out of
poverty has earned recognition from the ti-corruption watchdog, Transparency
International. Concerning all the transfdmation Rwanda has gone through, still has a long
way to go, as the majority of its people are still living below the poverty line, and the
country requests to explore other sources of revenue to finance its t to cut reliance on
foreign aid.
A company's strategy is management's action plan for running the business and conducting
operation (Hough, Thompson, Strickland III, & Gamble, 2011). Thus the crafting of a
strategy represents a managerial commitment to pursue a particular set of actions in growing
the business, attracting and pleasing consumers, competing successfully, conducting
operations, and improving the company's financial and market performance.
The Government of Rwanda strategy is about how it intends to grow its economy, How its
functional pieces of business namely: research and development, supply chain activities,
production, sales and marketing, distribution, finance, and human resources) will be
operated, and how its economy will be boosted Hough et al. (2011). Strategies that Rwandan
Government deployed grow out of poverty are being discussed as follow:
Regulatory Policies: Rwandan government has moved quickly to implement policies that
have maintained robust growth in the economy. The Government has financed some of
the aid shortfall, through increased domestic borrowing, which in turn spurred economic
growth by 8% in 2012, higher than the 7.4% growth rate projected in the World Bank's
July 2012.
> Vision 2020 Strategy: Vision 2020 strategy: Rwanda government espoused a vision
2020 strategy in the year 2000 with the primary objectives of transforming Rwanda into
a middle-income country by 2020. As a result, vision 2020 identifies six interwoven
/".
pillars: good governance, icient skilled human capital, vibrant private sector,
excellent physical infr ructure, and modern agriculture and livestock.
Therefore, it seeks to release the prod we capacities of the Rwandan people and offer
solutions adapted to the needs.
> Rwanda Governance Scorecard (RGS): Rwandan Government in July 2013, launched
the RGS 2012, to measure governance along eight indicators, namely rule of law;
political rights and civil liberties; participation and inclusiveness; safety and security;
investing in people; control of corruption, tra sparency and accountability; quality of
service delivery; and economic and corporatj governance. The eight categories of the
governance scorecard are critical to attract g FD1 into Rwanda, as they collectively
present a holistic measure of good governa ce and transparency.
> Effective Leadership: Rwanda's president, Pauly e whose Rwandan Patriotic Front
army ended the genocide when he took control in 1994. His pro-Western government
has successfully curbed bribery, instituted the rule of Jaw, and reduced street crimes and
discouraged the use of terms 'Hutu' and `Tutsi'. As a result. Rwanda was at peace again,
there was lack of corruption, and this contributed to the fast growing economy of
Rwanda.
> General Budget support: was designed by the Rwanda Gov rnment to contribute to the
implementation of generic goals as set in Rwanda's nati nal development or poverty
reduction strategy, whilst sector budget support was designed to accelerate progress
towards the partner government's sectoral goals.
The following strategies had the greatest influence towards the reduction of poverty in
Rwanda as the all have a positive impact on Rwandan economy: Vision 2020 strategy,
Macroeconomic policies, A .it'ultural Growth and Diversification, Gacaca, Rwanda
Governance Scorecard, E nomic Development and Poverty Reduction Strategies, and
Good Governance.
Rwanda's governance reforms, anti-corruption and Vision 2020 initiatives have paid off,
evidence in the World Economic Forum's (W Global Competitiveness Report 2012-
2013, which ranked Rwanda 63 among 144 countries and third among Sub-Saharan
countries. This shows that Rwanda benefits strong and well-functioning institutions, a good
security environment and efficient labour markets.
> Underdevelopment: Despite the large reduc ion in poverty over the past decade,
Rwanda remains a severely nder-develo ed country, with high inequality and
around 60% of the pqji1on living belo the poverty line. This means that Rwanda
as a country does not provide equal opportunities and lacks competition as it economy is
monopolistic.
Rwanda Population: The genocide resulted in Rwanda's GDP falling by 50% in 1994. It
also left the entire population, both survivors and perpetrators, traumatized, regarding
the refugees, of up to I million people who had been pushed into exile returned.
> Domestic Revenue: Rwanda domestic revenue is still insuffici t to finance the
country's annual budget and Vision 2020 plans.
> Allegations: Rwanda's foreign aid support has been threatened following allegations that
Rwanda has been financing rebels i D , as many Rfvandan refugees who fled the
genocide remain in the DRC. As a resu the UK, the sec nd-largest bilateral contributor
to Rwanda after the US, has frozen, unfrozen and then /efrozen its aid, worth US$ 120
million a year; Other European governments have also stopped or reduced their
contributions. The aid shortfall is likely to derail economic growth in the medium term
and frustrate Rwanda's growth initiatives.
External foreign exchange reserves also declined-by 18.1% as the central bank attempted
to meet market demand for fore change. The Rwandan government cannot
indefinitely draw down its forei reserves and increase domestic borrowings.
Consequently, home-grown solutions to generate state revenues remain critical to
execute its budget and Vision 2020 initiative.
> External Funding Reliance: Despite the impressive economic achievements of post-
genocide Rwanda, the economy still relies heavily on foreign aid, as foreign donors
finance 48% of Rwanda's bupt The majority of foreign aid is from general budget
support donors, namely tl orld Bank, European Union (EU), African Development
Bank (AfDB), Unite States (US), G rmany and the United Kingdom (UK), and two
sector budget support donors, Belo nn and Netherlands.
This becomes a challenge for Rwanda as their local monetary authorities will not be
able to implement its internal policies as their budget support donors will manage"-)
their funds utilizing their omin financial systems and procedures.
Stability based on economic growth and strong leadership is not sustainable in the end as
economies will fluctuate and leaders must change (McDoom, 2011). It is in Rwanda
strategic long-term self-interest therefore to reverse the current trend and increase the
political space in order to permit civil and political society to evolve responsible and
independent.
(1-'7
3. GALLO RECORD C MPANY S U H AFRICA
TR=20Q -0.000006Q2
MR=MTR/MQ=20-0.000012Q
TC=6 187 500 +2.5Q+0.00000275Q2
MC=MTC/MQ=2.5+0.0000055Q
CD output:
The profit maximising level is where:
MR = MC
20 0.000012Q = 2.5 + 0.0000055Q
20 2.5 0.0000055Q + 0.000012Q
17.5 0.000 75Q
17.5/0.0007175
Q = 1 0 000
CD price:
TR= Q x P
20Q 0.000006Q2 = 1 000 000 x P
20(1000000) 0.000006( 000 0)2 = 1000000P
20 000 000 6 000 0 0000P
14 000 000 = 1000
P = 14 000 000/ 0O000
P = 14
I MANCOSA GSB MBA9 128115
CD price is R14 each
Economic profit:
= TR TC
= (20Q 0.000006Q2) (6187500 + 2.5Q + 0.00000275Q2)
= [20(1000000) 0.000006(1000000)21 [6187500 + 2.5(1000000) +
0.00000275(1 00000)21
= (20 01000 6 000 000) (6187500 + 2 500 000 + 2 750 000)
= 14 000 000 1
= 2 562
P = MR=R10.75
Optimal output:
P = TR/Q
10.75 = (20Q 0.000006Q2)/Q
10.75Q = 20Q 0.000006Q2
10.75Q 20Q = 0.000006Q2
9.25Q = -0.000006Q2
0.000006Q2 9.25Q= 0
Q (0.000006Q 9.25) = 0
Either Q=0 or 0.000006Q = 9.25
0.000006Q = 9.25
Q = 9.25/0.000006
= 1 541 666.67
Profit level:
Economic profit
= TR TC
= (20Q 0.000006Q2) (6187500 + 2.5Q + 0.00000275Q2)
= [20(1541666.67) 0.000006(1541666.67)1 [6187500 + 2.5(1541666.67) +
0.00000275(1541666.67)2]
=(30 833 333.4 14 260 416.73) l8750 +J3 854 166.68 + 6 536 024.33
= 16 572 916.67 16 577 691.01
= -4 774.34
Loss of R4 774.34
This is not a stable equilibrium as it results in a loss.
The Compact Disc (CD) was originally established as a scheme for the storage and replay
of digitally encrypted audio. Compact Disc technology was developed by Philips in [979.
The output of the entire economy is limited; the limits are set by the resources available for
producing goods and services. According to Schiller (2008; 4) every nation has to grapple
with the core problem of scarcity the fact that there aren't enough resources available to
satisfy all our desires.
Once a decision has been taken about what goods and services should be produced, the
next question is how these goods and services should be produced (Mohr, Fourie and
associates: 2008:22) and therefore production factors needs to be taken into consideration.
Schiller (2008: 33) defines factors of production as resource inputs used to produce goods
and services such as land, labour, capital and entrepreneurship. There are four main factors
that affect production of Discs (CD's), and are discussed as follows:
Land: Denotes to all natural resources such as crude oil, water and air (Schiller 2008:4).
In South Africa there are a large areas with little or no agricultural or mineral value but
there areas that are rich in miner , therefore the availability of resources in South
Africa affects the produ CD's since the availability of resources are fixed in
supply and cannot increased.
Capital: Refers to the final goods produced for use in further production (Schiller
2008:4). To produce capital goods, current consumption has to be sacrificed in favour
of future consumption (Mohr et al. 2008:23). The equipment and machinery used to
produce CD's in South Africa becomes outdated now due to technological progress,
therefore provision has to be made for the replacement of existing capital goods.
Productivity relies on the finance factors. Finance is the life-blood of modem business
(Schiller, 2000). There should be a better control over both fixed capital and working
capital.
Labour: Goods and services cannot be produced without human effort (Mohr et al.
2008:22) Therefore labour is defined as the exercise of human mental and physical
effort in the production of CD's. South African population is dominated by the
unskilled labour workforce therefore the knowledge and skills possessed by the
workforce have an effect on the production of CD's resulting to low productivity.
There are other several factors that affect the production of CD's in South Africa, and these
factors are discussed as follows:
Production of CD's in South A rica is acted by/ law and order situation, infrastructure,
market, sources of rawl igh ost of 1 bour and skilled workforces (Schiller,
2000). Productivity of CD's i South kfrica la tely depends on technology, as a results
technical factor determine the production of 's and this includes plant and machinery,
research and development.
Mohr et al (2010) states that Government factors are broad of the effect of political events
on the production of CD's. Schiller (2013) states that when the government owns the
factors of production, imposes high taxes, or regulates the utputs, therefore as a result
there is a slight occasion or incentive to project impr ved products or pursue new
technology.
Schiller (2013) states that no matter how an economy is organized, there's a limit to how
much it can produce, the most evident of limit is the amount of resources available for
producing goods and services and the quantity of CD's demanded.
In consideration of the political conversion in 1994, South Africa has observed the
hastening of its previously high unemploymen rate, as an outcome mounting of
unemployment is a foundation of significant nxiety to ioth policy makers and labour
market participants (Burger & Fintel, 2009). The cai s of unemployment in South Africa
vary, there are too many causes of unemploym nt in South Africa (Hendriks 2016), and
therefore Labour Union participation is not the only cause of high unemployment in South
Africa.
Rust (2001) as quoted by Uys (2011) states that Trade Unions have the potential to
mobilise labour in a collective unit and in doing so this decrease the extent of decision
making autonomy.Labour Relations Act (66 of 1995), (LRA) Section 213, defines a Trade
Union as an association of employees whose principal puipose is to regulate relations
between employees and employers, including any employer's organization".
Two standard definitions of unempl ment are adopted by Stats SA, namely the narrow
definition and broad definition of un ployment. Individuals were defined as narrowly
unemployed if they: (i) did not work during the seven days prior to the interview, (ii)
wanted to work and would accept a job if being offered one , and (iii) had taken active
steps to look for work or to start a business in the four weeks prior to the interview. Those
who only met the first two requirements a ve were defined as discouraged work seekers,
and are classified as inactive under e narrow definition but unemployed under the broad
definition (Hendriks, 2016).
29
Trade Unions have the power to raise wages therefore they have a capacity of transforming
the labour market into a monopoly, rather than a competitive market with many buyers
(employers) and sellers (employees), as a result there are many buyers but only one seller
which is the union (Schiller, 2000). Comparable slig ly to a monopoly market (monopoly
market is defined as "a market covering a solit y. firm that has or is adf c/ ent to entire
governor of the sector"), the grades will be at equilibrium with higher pr ces and lower
supply than in the competitive equilibrium. In relation to the labour mar t, this indicates
that wages will be higher, and this will have a negative effect O1 employment as
unemployment will be higher too.
Wage
Unemployment
Minimum
wage
Free market
wage
Quantity of Labor
Quantity Quantity
demanded Oplied
Unions compel the employers for higher wages and better working conditions which
eventually increase labour cost, and em loyees have too many rights, this result employers
hiring employees temporarily thr gh labour brokers or not hiring at all (Hendriks, 2016).
This is more heightened by le severe labour laws in South Africa. As a consequence of
these factors it is hard to address the issue of unemployment in South Africa.
There is a market for labour just as there is a 3 arket for goods and services. Workers get
paid based on what the market requires a ny given time, skills are marketable objects.
Bhorat, Meyer and Mlatsheni (2002) as quoted by Hendri (2016) argue that there is
unanimity that skill shortages are foremost impediments/to economic growth and job
formation in South Africa. A high level of unemployi ent is a replication of a skills
mismatch.
According to Faulkner & Loewald (2008), the structure of the economy has advanced in
reaction to technological vagaries, the demands of production and developments in the
global economy, growing the need for higher-level skills. Where the pool of skills in South
Africa is restricted in the short term. These lacks are the effects of the interchange of
numerous compound socio-political and economic factors, many of which are the
inheritance of the apartheid regime (Tshilongamulenzhe, 2012).
South African history of race discrimination has designed the operational of the labour
market and therefore created a structural element to the employment mystery that has a
nearly permanent effect on the supply ost of labour (Faulkner & Loewald, 2008).
Confirmed characteristics of labour gislation are vastly deterring by global standards,
therefore rigors linked with arba tion processes and in policies and legislation leading the
hiring and firing of workers serve as problems to employing new workers (Soko &
Balchin, 2014).
Many researchers argue that the rate of high unemployment in South Africa is not caused
by one factor therefore; one should consider all the various factors that contribute to
unemployment when explaining the causes of nemployment in the South African labour
market. Soko & Balchin (2014) conch_ stating that the main causative feature to the
unemployment experiments in SouL Africa is the contemporary formal of the republic's
labour market establishments and governing atmosphere. The direction of future
employment policy is unclear, but economists do not expect the high rates of
unemployment to decline in the near future.
R10
R
RS
We Rate (pH hour)
R7
R6
R5
R4
R3
R
RI
RO
0 5 10 15 20 25 30 35 40 4-5 50 55 60 65 70 75 80 85 90
Labour Supply and Demand Cun-es
Labour Demanded Labour Supplied
Conducting with South Africa's massive unemployment and its effects on economic growth
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