Understanding South Africa's Labor Force: Formal and Informal Sectors, Populism, and Economic Trends

Running Head: INTERNATIONAL BUSINESS MANAGEMENT
INTERNATIONAL BUSINESS MANAGEMENT
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Answer 1
The South African formal and informal sector shares near equal exposure in the local
market. The labour force in the South market has been increasing in a rapid pace since the last
decade. One of the contributing factors in this regard can be identified as the influx of foreign
direct investment and the government policies in order to deal with the highly escalating labour
force participation rate. However, as per the statistics of the Zourides (2018) it can be stated that
the rate of participation has been decreased in the fourth quarter of 2018 up to 10% in compare to
the third quarter with a percentage of 59.50. However, it can be argued that the labour force in
South Africa divides into both formal and informal labour forces. As per the government report it
can be argued that there are more than 35,000 are employed in the formal sectors where as the
informal sectors comprises 73,000 workers (tradingeconomics.com., 2019). The increasing trend
of employment in the informal sectors is resembled with the purpose of degradation in the
economic situation all over the country. The pace of industrial boom is not equal for all the
sectors. As a result of that the manufacturing industry suffers the most with a loss of nearly
105,000 people whereas the social and personal service employment has been reduced with
93,000 workers lost their jobs (statssa.gov.za., 2018). However, the present economic situation is
advantageous and effective for the transport, construction, mining and private household sectors.
For an instance, in the transport industry the number of workers increases with a record number
of the 54,000 are recruited.
Based on this understand, the formal sectors in South Africa is comprised with the
mining, manufacturing, transport, construction and the electric industries. This is considered to
be one of the major industries in the country with a total amount of gross earning was R627
billion in the fiscal year of 2017 (Charman et al., 2017). In the non-agricultural sector, the

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economy is quite soothing with an increase of 1.6% in compare to the previous year. Therefore,
the promising trend of the South African formal industry is contributed a lot in the process of the
developing the economy of the country. On the other hand, the informal sector in South Africa is
more interesting with almost half the employment is working in the informal industry. In fact,
the informal sector contributes 18% of the GDP (Rogerson, 2016). Due to the lack of industrial
expansion it becomes a problem for the South African government to afford more job
opportunities so that the unemployed people start doing informal business. However, the
informal sector is booming rapidly as most of the organised retailers are starting encapsulate the
informal market like Pick n Pay started using its spaza supply program and create a competitive
environment for the informal businessmen (Zourides, 2018).
Answer 2
As per the writing of Gantz (2017) it can be stated that populism is a great threat to the
discourses of globalisation and started shaking the ground of democracy in a more sophisticated
manner. The rise of populism led to confront the democratic foundation and in a matter of time it
turns into an authoritarian principle leading to discord. In this context, the situation in Europe
after Brexit is quite challenging and not free from further upside down in the form of economic
progress. Small countries like Romania and The Netherlands are started joining the populist
movements and the growing political support for those political leaders are increased in a rapid
pace which could rupture the social cohesion easily (Cox, 2017). In this regard, the new global
phenomenon and the renegotiation of the NAFTA between UK and European Union is identified
as an important aspect. Retaining the practice of globalisation and free trade occupation an
unrestricted trade dialogues and agreement has been signed between UK and EU with the
purpose to flourish the trade extensively so that it will make a trade nexus among the important

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countries. In this regard, the global tension is further heightened with the new shape in the global
polity in an economic nutshell (Rodrik, 2018).
Besides this, the new global order where the clash between authoritarian populism and
the globalisation has become inevitable the global managers also try to deal with different global
scenario. In this regard, more intensity of the free trade will be attached with the organisational
activities so that encourage the other countries in making more profit by entering into a free trade
agreement. In this context, the report of Stavrakakis et al., (2017) points out that most of the
developed countries solidify their position with the purpose to establish a free trade agreement.
In fact, entering into the new market and launching new branches into the developing world
would provide them the strategic advantage to continue the free trade practice effectively
(Gordon, 2018). Moreover, this free trade practice will also be beneficial for the development of
the country’s economy as well.
In this context, the free trade practice will eradicate the process of comparative advantage
as the big organisations are tied up with other business houses and make an international
business web so that it will be beneficial for all the stakeholders. Basically, the perception of
comparative advantage will no longer be valid if the free trade and process of globalisation will
reach atop (Essletzbichler, Disslbacher & Moser, 2018). Therefore, the principle of free trade
will try to curb down the process of making populism an authoritarian and vulnerable enough. It
is associated with the cooperative advantage theory that will be invalidated. It is true that there
are enough time for globalisation to initiate itself in full swing. Still, the growing practice of
popular ideology restricts the pace of the free trade.