THE HAZARDOUS TRANSITION FROM EDUCATION TO EMPLOYMENT II - THE STABILITY AND QUALITY OF EMPLOYMENT

Introduction

The International Labour Organisation considers the transition to work complete when people enter their first stable or satisfactory job. Stability can be investigated by considering the movement between education and employment states during a specified period of time.

The Quarterly Labour Force Survey divides its sample of respondents into four representative groups of equal size. In each quarter, one of the groups is dropped, and another takes its place. This design means that any one of the groups can be tracked over four quarters, yielding information on mobility between states. For a number of reasons, the matching of persons with the same identification statistics is not perfect, and analysts have to develop ways of removing false matches, since Statistics South Africa does not do it for them, with one exception. That exception is a matched set of observations from the third and fourth quarter of 2013. An International Monetary Fund study[i] has found that the matching in this data set was good and that sample attrition between the third and fourth quarters imparted no significant bias.

Method

In studying transitions, one has to devise a set of mutually exclusive and collectively exhaustive states. Five are defined here:

Enrolled in education and not working
Not enrolled in education and economically active
Not enrolled in education and unemployed (both the officially unemployed and discouraged workers)
Employed for less than 35 hours per week
Employed for 35 hours per week or more.

From the data, one can construct probabilities of remaining in a given state, and probabilities of moving from one state to another. These probabilities are set out in the Appendix, disaggregated into four age groups and both genders.

Employment stability

The principal features of the mobility tables can be summarized as follows:

The persistence of enrolment in education among the youngest age group (15-19) for both men and women. The people leaving that state were most likely to become economically inactive and unemployed. There is a churn between education enrolment and other states among this age group.
The emergence of somewhat greater stability among the next youngest group (20-24). The probabilities of remaining in economically inactivity, unemployment or employment are higher than in the youngest age group, and the probability of remaining in education is lower.
Increasing stability in full-time employment as age rises. The stability of young men in full-time employment increases uniformly with age, but even in the oldest age group (30-34), 8.6% of those in full-time employment in the third quarter had moved to other states in the fourth quarter. The progression of stability in full-time employment by age among young women is more hesitant, but markedly higher in the two older age groups.
Movement from part-time to full-time employment. There is considerable movement from part-time and full-time employment among young men, with relatively little movement in the other direction. A similar but less pronounced pattern can be seen among young women.
The risk of getting stuck in unemployment and economic activity. The probability of remaining in unemployment rises with age in the three youngest age groups, and drops slightly after that. The probability of remaining in economic inactivity also rises with age.

Bearing in mind that the probabilities refer to a three month period, the general picture is one of fluidity which only gradually decreases with age. This accords with findings from a study of transition rates ten years earlier[ii].

Fluidity is associated with the nature of the employment contracts. Just 25% of the youngest age group reported having permanent jobs according to the Labour Dynamics Survey of 2015, rising to 40%, 51% and 59% in older age groups. 32% in the 15-19 age group had a limited duration contract, dropping to 16% in the 30-34 age group. 43% in the 15-19 age group had contracts of unspecified duration, dropping to 25% among people age 30-34. Of the employees with contracts of unspecified duration, 64% had only verbal agreements with their employers.

The IMF study found that previous experience has a much stronger effect on the job finding rate than education, and that the effect was particularly marked among the young. Consistent with international experience, it found that long term unemployment reduced future employability, while higher education reduced the job exit rate. A job in the informal sector increased the probability of finding a formal sector job.

Employment satisfaction

There is a strong desire for more work among employed people working short weeks. The Labour Dynamics Survey reports that 57% of those working for up to 15 hours per week wanted more work. The corresponding percentages for those working 16 -30 hours and 31 – 40 hours were 48% and 12%.

There is very little information on job satisfaction among any but the most circumscribed groups. An exception is data from the Human Sciences Research Council’s South African Social Attitudes Survey of 2005, which found the following from a representative sample:

Work attribute	Per cent viewing work attribute as important	Per cent agreeing that work attribute characterises their job
Job security	99	65
Good opportunities for advancement	94	38
An interesting job	93	65
High income	92	28
A job that helps one to help other people	88	69
A job that is useful to society	84	68
A job that allows one to work independently	81	59

Source: Bongiwe Mncwango and Lolita Winnaar, South Africans at work: How satisfied are we? Human Sciences Research Council, n.d.

*The information is not disaggregated by age.

Conclusion

The findings in this brief are consistent with the picture which emerged in Youth Brief 5. High levels of unemployment are associated with high mobility between states, low levels of contractual stability (which, however, increase with age) and a consequent high valuation of job security. The most potent cause of dissatisfaction with work is low income, followed by lack of opportunity for advancement. Nonetheless, a clear majority of respondents in the 2005 SASAS found their job interesting and agreed that it helped other people and that it was useful to society.

The International Labour Organization envisages that the education to work transition should lead to stable and satisfactory employment. This is far from being the case for many of South Africa’s young people.

Charles Simkins

Head of Research

charles@hsf.org.za

NOTES

[i] Rahul Anand, Siddharth Kothari and Naresh Kumar, South Africa: Labour Market Dynamics and Inequality, International Monetary Fund Working Paper, WP/!6/137, July 2016

[ii] V Ranchhod and T Dinkelman, Labour market transitions in South Africa: What can we learn from matched Labour Force Survey data? Southern African Labour and Development Research Unit, University of Cape Town, 2007

Appendix – Mobility between states

The rows of the tables are the states in the third quarter and the columns are the states in the fourth quarter. For instance, the probability that a young man between 20 and 24 who was working part-time (less than 35 hours per week) in the third quarter had moved to full-time employment in the fourth quarter was 0.247 or 24.7% (see the green block). The diagonals in the table represent the probabilities that people remained in the same state between the third and the fourth quarter (see the yellow blocks for the 30-34 age group).

Transitions
Third quarter to fourth quarter 2013
Men	Probabilities
	Final state
Initial state
15-19	In education and not working	Out of education and inactive	Out of education and unemployed	Working <35 hours	Working >=35 hours

In education and not working	0,946	0,044	0,008	0,002	0,003
Out of education and inactive	0,451	0,437	0,103	0,010	0,009
Out of education and unemployed	0,155	0,116	0,610	0,017	0,101
Working <35 hours	0,264	0,019	0,034	0,484	0,199
Working >=35 hours	0,031	0,022	0,074	0,073	0,800

20-24

In education and not working	0,873	0,051	0,071	0,006	0,039
Out of education and inactive	0,166	0,539	0,282	0,014	0,068
Out of education and unemployed	0,047	0,070	0,763	0,017	0,104
Working <35 hours	0,061	0,044	0,185	0,463	0,247
Working >=35 hours	0,017	0,022	0,105	0,022	0,834

25-29

In education and not working	0,784	0,062	0,153	0,000	0,134
Out of education and inactive	0,057	0,705	0,225	0,013	0,120
Out of education and unemployed	0,012	0,069	0,767	0,024	0,129
Working <35 hours	0,011	0,000	0,090	0,506	0,393
Working >=35 hours	0,006	0,013	0,043	0,028	0,910

30-34

In education and not working	0,672	0,053	0,275	0,000	0,207
Out of education and inactive	0,000	0,783	0,217	0,000	0,098
Out of education and unemployed	0,011	0,073	0,734	0,020	0,162
Working <35 hours	0,000	0,022	0,107	0,568	0,303
Working >=35 hours	0,001	0,009	0,048	0,027	0,914

Transitions
Third quarter to fourth quarter 2013
Women	Probabilities
	Final state
Initial state
15-19	In education and not working	Out of education and inactive	Out of education and unemployed	Working <35 hours	Working >=35 hours

In education and not working	0,940	0,045	0,011	0,002	0,002
Out of education and inactive	0,327	0,506	0,137	0,009	0,021
Out of education and unemployed	0,120	0,156	0,682	0,006	0,036
Working <35 hours	0,202	0,062	0,000	0,736	0,000
Working >=35 hours	0,045	0,060	0,090	0,000	0,805

20-24

In education and not working	0,848	0,070	0,068	0,000	0,013
Out of education and inactive	0,095	0,629	0,225	0,007	0,044
Out of education and unemployed	0,044	0,158	0,706	0,013	0,079
Working <35 hours	0,034	0,034	0,082	0,578	0,272
Working >=35 hours	0,011	0,042	0,108	0,050	0,790

25-29

In education and not working	0,733	0,077	0,154	0,000	0,036
Out of education and inactive	0,022	0,708	0,220	0,004	0,047
Out of education and unemployed	0,024	0,127	0,744	0,019	0,086
Working <35 hours	0,000	0,050	0,158	0,584	0,208
Working >=35 hours	0,003	0,013	0,057	0,021	0,906

30-34

In education and not working	0,588	0,155	0,134	0,000	0,123
Out of education and inactive	0,021	0,733	0,180	0,020	0,046
Out of education and unemployed	0,011	0,165	0,716	0,031	0,078
Working <35 hours	0,011	0,076	0,117	0,579	0,218
Working >=35 hours	0,004	0,017	0,054	0,025	0,901

The size of the sample means that the precision of the off-diagonal estimates is limited. Nonetheless, they are sufficient to establish the conclusions drawn in the main text.