Human Capital Constraints in South Africa: A Firm-Level Analysis

This paper examines human capital constraints in the South Africaneconomy, and the austerity of these constraints on firms in the country.The two key human capital constraints explored in this article arethe inadequately educated workforce and labour market distortions.Regression analysis was applied to examine determinants of increasedlabour productivity in manufacturing firms. Education and labourmarket distortions were found to have a varying influence on outputper worker. Principal Component Analysis (pca) of the explanatoryvariables achieved similar results. This study found that the highest percentageof the total variance is explained by latent variables that incorporateeducation, training, compensation, region and Sector EducationTraining Authority (seta) support and effectiveness.