Employment Creation Through Small, Medium and Micro Enterprises (SMMEs) in South Africa: Challenges, Progress and Sustainability

Abstract

South Africa is characterized by the persistence of structural and cyclical unemployment which manifests in 24, 7% of the country’s working-age enduring long term joblessness. This socio-economic plight has engendered the promotion of Small, Micro and Medium Enterprises (SMMEs) as instrumental vehicles for employment creation despite formidable challenges they face. As much as the SMME sector absorbs the majority of total labour force, their failure to resist internal and external shocks restricts growth and graduation into the formal sector. SMMEs are renowned for short lifespans, poverty wages and precarious employment opportunities suggesting they fail to lift the boards. It is against this backdrop that this paper concludes that, it is imperative to, firstly, increase financial and non-financial support, sector-specific research and the design of customized interventions as well as reducing regulatory constraints on SMMEs in order for the small businesses to survive, grow and create sustainable employment for the discouraged South African labour force. The purpose of this paper is to expose the South African employment challenge, trace SMME progress (or lack thereof) in employment creation, identify constraints faced by small entities and present recommendations as, perhaps a way forward for the exacerbation of small entity productivity, improvement of earnings of the working poor and getting the poor working.

DOI: 10.5901/mjss.2014.v5n25p65