This study is part of an ongoing research project on various dimensions of labour productivity in the South African workplace.
The aim of this article was to determine the magnitude of employee migration to smaller firms in the South African workplace and the directional impact of this migration on employee productivity and real remuneration levels when different employee diversity attributes are considered.
The study focussed on understanding why the migration of employees from bigger and more labour productive firms can have a positive employee productivity spillover effect on smaller firms.
Two sets of inbound employee migration possibilities were considered, namely employee migration from bigger firms and that from other smaller firms. The manufacturing industry of Gauteng Province of South Africa was used as a case study. Fixed-effect panel data estimations were performed to determine the diversity-based employee productivity and real remuneration effects created by inbound employee migration from bigger firms, other smaller firms and new non-migrating employees.
The estimation results confirm superior positive employee productivity and real remuneration spillover effects because of inbound employee migration from bigger firms. The study also indicates that the positive employee productivity and real remuneration spillover effects because of inbound employee migration are greater for a more employee-diverse workplace.
Skills training and the retention of skilled employees are of utmost importance if employee productivity in firms is to be enhanced.
The study confirms the greater employee productivity and remuneration spillover impacts of employee migration to smaller firms in the South African workplace. The size of the employee productivity and remuneration effects also vary according to employee diversity attributes.
inbound employee migration; diversity attributes; fixed-effect panel data estimations; employee productivity; real remuneration; bigger firms.
The aim of this article is to determine the magnitude of employee migration to smaller firms in the South African workplace and the directional impact of this migration on employee productivity and real remuneration levels when different employee diversity attributes are considered. Two sets of inbound employee migration possibilities are considered, namely employee migration from bigger firms and that from other smaller firms. The manufacturing industry of Gauteng Province of South Africa is used as a case study.
This article forms part of an extensive ongoing research agenda on various aspects of firm-based employee productivity in the South African workplace such as industry differences on remuneration gap-enhanced labour productivity levels (Van Zyl
Effective knowledge transfer (because of superior technological know-how, managerial and production efficiencies and economies of scale) between firms via employee migration could act as an important conductor for higher employee productivity levels and real remuneration levels (Castillo et al.
A number of published researches deal with the impact that multinational firms have on the transfer of higher employee productivity levels to domestic firms (Castillo et al.
In nearly all the studies, positive employee productivity transfer effects are derived, especially for net employee migration from bigger to smaller firms within the same industry and it is strongly argued that the superior technological base of bigger firms is an important channel for the transfer of higher employee productivity levels from bigger to smaller firms (Bellak
The studies of Fosfuri, Matta and Rönde (
None of the studies in the covered literature is firm-based; instead, they employ a national data set that is used in econometric employee decomposition models (Castillo et al.
The vast majority of the studies deal with the characteristics and magnitude of employee migration from bigger to smaller firms (Balsvik
In conclusion, all the research findings indicate positive spillover effects when inbound employee migration from bigger to smaller firms occurs. A very limited number of these studies consider any specific diversity attributes in the workplace.
The research design comprises the
identification of the various diversity attributes to be included in the inbound employee migration – employee productivity estimation model
specification of the inbound employee migration – employee productivity estimation model and employee migration – employee real remuneration estimation model
compilation of firm-based data sets of inbound employee migration, employee diversity attributes and real remuneration levels for the proxy smaller firms in the sample
estimation process
interpretation of the estimation results.
The focus of this article is on the employee productivity and real remuneration spillover effects of inbound employee migration to smaller firms in the South African workplace. Smaller firms are defined as those firms that have on average fewer than 100 employees (Van Zyl
The first estimation is performed to determine the impact on employee productivity levels of smaller firms when inbound employee migration occurs without taking employee diversity attributes into consideration.
The second estimation is performed to determine the impact on real remuneration levels for smaller firms when inbound employee migration occurs without taking the different employee diversity dimensions into consideration.
The third estimation is performed to determine the impact on employee productivity levels of smaller firms when inbound employee migration occurs and the different employee diversity dimensions are considered.
The fourth estimation is performed to determine the impact on real remuneration levels for smaller firms when inbound employee migration occurs and when the different employee diversity dimensions are considered. The different adapted estimation equations are explained in the following few paragraphs.
In the first equation, the employee productivity effects of inbound migrating employees (without considering various employee diversity dimensions) are expressed as
where Δ
The equation basically measures the difference between the average employee productivity of migrating employees from bigger to smaller firms and existing employees
Equation 2 measures the real remuneration spillover effects of inbound migrating employees (without considering various employee diversity attributes) and is expressed as:
where Δ
The equation basically measures the difference between the average real remuneration levels of migrating employees from bigger firms and existing employees
In the third equation, employee productivity spillover effects of inbound migrating employees (when various employee diversity dimensions are considered) are expressed as:
where
Equation 3 measures the difference between the average employee productivity of migrating employees from bigger firms and existing employees per diversity attribute, the difference between the average employee productivity for migrating employees from other smaller firms and existing employees per diversity attribute and the difference between the average employee productivity of non-migrating new employees and existing employees per diversity attribute.
Equation 4 measures the real remuneration spillover effects of inbound migrating employees (considering various employee diversity attributes) and is expressed as
where ΔERi,t,t+3 is the change in real remuneration for firm i for period
The equation basically measures the difference between the average real remuneration levels of migrating employees from bigger firms and existing employees per employee diversity attribute, the difference between the average real remuneration levels for migrating employees from other smaller firms and existing employees per employee diversity attribute and finally the difference between the average real remuneration levels of non-migrating new employees and existing employees per employee diversity attribute.
The study employs fixed-effect panel data estimations for all the inbound employee migration – employee productivity and the inbound employee migration – real remuneration level categories per diversity attribute.
To capture the employee productivity and real remuneration impacts of inbound employee migration to smaller firms, the manufacturing industry of Gauteng Province is used as a case study, given the importance of the manufacturing industry in the gross geographical product (GGP) of Gauteng Province and also given the availability of firm-based data. Contact information was supplied by the Manufacturing Sector Education and Training Authority (MERSETA) and the Department of Labour. Firm data were supplied by the individual firms in the sample group. Statistical validation requires a representative sub-sector spread of firms in the manufacturing industry of Gauteng Province. The sample response of 83 firms, which covers a variety of sub-sectors in the Gauteng manufacturing industry, is confirmed to be statistically significant.
The sample period was for 2012–2014. For each firm in the sample group, data were collected on the average annual employment levels per gender group, skill level category, age groups and per race group; average annual real remuneration levels per gender group, skill level categories, age groupings and per race group; average annual real sales per employee; average annual employment rates of new migrating employees from bigger firms; the average annual employment rates of new migrating employees from smaller firms; average annual employment rates for new non-migrating employees; and average annual employee turnover.
A summary of the sample statistics is provided in
The panel data estimates (first and second estimations) for the impact of the inbound migration of employees from bigger and other smaller firms on employee productivity and real remuneration levels (without considering employee diversity attributes) are listed in
Panel data estimates for the impact of inbound employee migration on employee productivity and real remuneration without taking employee diversity dimensions into consideration.
Variable | Employee productivity impact estimates | Employee real remuneration impact estimates |
---|---|---|
Employee migration from bigger firms | 0.371 (0.103) | 0.281 (0.132) |
Employee migration from other smaller firms | 0.131 (0.099) | 0.175 (0.84) |
New non-migrating employees | 0.009 (0.0006) | 0.003 (0.0007) |
Note: The estimates are significant at 5% confidence level.
From
Given the insignificant impact of new non-migrating employees on employee productivity and real remuneration levels in the first and second estimations, only the impacts of employee migration from bigger and other smaller firms in the third and fourth estimations are reported. The results of the third and fourth estimations are listed in
Panel data estimates for the impact of inbound employee migration on employee productivity taking employee diversity dimensions into consideration.
Variable | Employee productivity impact estimates | Employee real remuneration impact estimates |
---|---|---|
Female participation > 40% | 0.314 (0.121) | 0.273 (0.107) |
Female participation < 40% | 0.231 (0.115) | 0.265 (0.099) |
Age < 35 years | 0.173 (0.098) | 0.113 (0.083) |
Age between 35 and 55 years | 0.363 (0.118) | 0.413 (0.171) |
Age 55 years and older | 0.253 (0.097) | 0.311 (0.152) |
Specific race group more than a 60% share | 0.191 (0.089) | 0.201 (0.105) |
Specific race group less than a 60% share | 0.241 (0.105) | 0.295 (0.114) |
Category A occupations | 0.291 (0.101) | 0.301 (0.127) |
Category B occupations | 0.193 (0.089) | 0.189 (0.084) |
Female participation > 40% | 0.203 (0.114) | 0.190 (0.120) |
Female participation < 40% | 0.173 (0.110) | 0.181 (0.116) |
Age < 35 years | 0.121 (0.097) | 0.091 (0.009) |
Age between 35 and 55 years | 0.169 (0.098) | 0.157 (0.102) |
Age 55 years and older | 0.162 (0.091) | 0.137 (0.112) |
Specific race group more than a 60% share | 0.143 (0.093) | 0.149 (0.119) |
Specific race group less than a 60% share | 0.154 (0.101) | 0.156 (0.117) |
Category A occupations | 0.211 (0.111) | 0.129 (0.096) |
Category B occupations | 0.174 (0.117) | 0.164 (0.127) |
Note: The estimates are significant at 5% confidence level.
The panel data estimates (third and fourth estimations) for the impact of the inbound migration of employees from bigger and other smaller firms on employee productivity and real remuneration levels (considering employee diversity attributes) are listed in
The estimates of the third and fourth estimations are positive for employee migrations from both bigger and smaller firms. The estimation results clearly indicate that when employee diversity dimensions are considered, the general superior positive employee productivity and real remuneration spillover effects that inbound employee migration from bigger firms generate are still evident.
In terms of the gender dimension, the results indicate that a more gender-diverse workplace does create higher employee productivity and real remuneration spillover effects when inbound employee migration occurs. This is evident from higher positive estimates for the greater than 40% female participation bracket and it is true for employee migrations from both bigger and other smaller firms. The higher comparative estimates for the 35–55-year age bracket indicate that the greatest employee productivity and real remuneration positive spillover effects are created when employee inbound migration occurs in this age bracket. This is evident for employee inbound migrations from both bigger and other smaller firms. The fact that greater estimates are reported for the category in which a specific race group has less than a 60% share of the workforce is indicative of greater employee productivity and real remuneration spillover effects that are because of a more diverse racial composition of the workforce (this is true for employee inbound migration from both bigger firms and other smaller firms). The estimation results indicate that the inbound migration of higher skilled employees results in higher employee productivity and real remuneration levels spillover effects (the estimates for category A occupations are higher than the estimates for occupation B estimates).
What can we learn from the results of this study and how do the results compare with the experience of developed economies in this regard? Firstly, the results of this particular study confirm the importance of inbound employee migration as an important conductor for the transfer of knowledge, higher skill levels, technological know-how and managerial efficiencies to smaller firms (even in a developing economy such as South Africa). Secondly, the results confirm the importance of a more diverse South African workplace if the positive productivity and real remuneration levels generated by inbound employee migration are to be optimised.
The aim of this article was to determine the magnitude of employee migration to smaller firms in the South African workplace and the directional impact of this migration on employee productivity and real remuneration levels when different employee diversity attributes are considered.
To determine the employee productivity and real remuneration spillover effects of inbound employee migration to smaller firms in the South African workplace, inbound employee migrations from both bigger and smaller firms were considered. The results of this study are firstly a confirmation of international research results (Balsvik
A further extension of the study is a geographical (provincial) comparison on the magnitude of employee migration to smaller firms in the South African workplace and the directional impact of this migration on employee productivity and real remuneration levels when different employee diversity attributes are considered.
The author declares that he has no financial or personal relationships that may have inappropriately influenced him in writing this article.
Summary statistics.
Variable | 2012 | 2013 | 2014 |
---|---|---|---|
Average annual employment | |||
Female | 35 | 36 | 37 |
Male | 51 | 53 | 54 |
Specific race group more than a 60% share | 58 | 57 | 59 |
Specific race group less than a 60% share | 28 | 32 | 32 |
Category A occupations | 24 | 23 | 23 |
Category B occupations | 62 | 66 | 68 |
Employees 35 years and younger | 14 | 13 | 15 |
Employees between 35 and 55 years of age | 61 | 66 | 64 |
Employees 55 years and older | 11 | 10 | 12 |
Average annual employee remuneration | |||
Female | R78 532 | R82 581 | R88 355 |
Male | R91 538 | R96 491 | R99 399 |
Specific race group more than a 60% share | R72 665 | R74 209 | R77 411 |
Specific race group less than a 60% share | R84 219 | R89 365 | R93 553 |
Category A occupations | R99 462 | R103 671 | R117 538 |
Category B occupations | R70 461 | R78 277 | R82 674 |
Employees 35 years and younger | R68 499 | R72 196 | R76 194 |
Employees between 35 and 55 years of age | R79 351 | R85 311 | R88 511 |
Employees 55 years and older | R83 197 | R91 743 | R94 386 |
Average annual real sales per employee | R124 137 | R137 988 | R154 433 |
Average annual employment rates: Migrating employees from bigger firms (%) | 3.45 | 3.76 | 3.82 |
Average annual employment rates: Migrating employees from other smaller firms(%) | 2.36 | 2.44 | 2.41 |
Average annual employment rates: New non-migrating employees (%) | 0.48 | 0.55 | 0.56 |
Average annual employee turnover rate (%) | 1.31 | 1.56 | 1.77 |