Rising Transport Costs Discourage Job Seekers
12 Jul, 2022

Rising transport costs and the decline of rail services have led to more discouraged work seekers, who want to work, but no longer actively search for it. As transport costs go up, more people stop looking for work – and the poor are disproportionately affected.

These are some of the findings of research by two Stellenbosch academics – JM van der Merwe and SC Krygsman, of the university’s department of logistics – who presented their research on the second day of the Southern African Transport Conference, at the CSIR International Conference Centre in Pretoria.

South Africa recorded an unemployment rate of 34.4% in 2021 – its highest since the first Quarterly Labour Force Survey in 2008 – and has also seen a rise in the number of discouraged work seekers, reaching 3.3 million individuals in 2021.

This dramatic increase in discouraged work seekers is not seen in many other countries. In South Africa, the number of discouraged work seekers make up 14% of the total labour force – compared to the global average of only 2.4%.

“A panel regression model indicated a positive relationship between transport cost increase and discouragement,” said Van der Merwe. “We also saw disproportionate household expenditure on transport to search for employment between different income groups.”

Van der Merwe and Krygsman used statistics from Quarterly Labour Force Surveys, National Household Travel Surveys and National Income Dynamic Surveys Descriptive to assess discouragement and transport trends between 2008 and 2020.

“In South Africa, the number of discouraged work seekers increased in parallel with the deterioration of South Africa’s transport system,” said Krygsman. “This left many commuters captive to inefficient and unaffordable public transport modes when trying to reach economic opportunities.”

There was a dramatic decrease in rail passenger journeys in South Africa, from approximately 600 million in 2008 to around 175 million in 2019. These passengers had to resort to other more expensive transport modes due to the deterioration of rail services.

Van der Merwe and Krygsman quote Stats SA data stating that over the past 12 years, the percentage of discouraged work seekers indicating transport issues as a reason for discouragement increased by approximately 20% and now account for roughly 70% of all discouraged work seekers in 2019.

QLFS and NIDS datasets show that around 50% of respondents make use of enquiring in-person at workplaces, farms and factories to find employment, which leaves them vulnerable to rises in transport costs.

The NIDS found that 62% of respondents borrowed money from family within their household to fund the travel costs of job searches.

The researchers also found that households falling within the lowest expenditure quartile (R74-R1 386) spent on average 12% of their total household expenditure on transport search cost, compared to 2.6% for households in the highest household expenditure quartile (R4 163-R211 531).

“This disproportionate transport search cost expenditure between lower and high-income households could fuel existing high-income inequality in South Africa,” Van der Merwe and Krygsman state in their paper, titled “Investigating The Relationship Between Transport And Labour Discouragement In South Africa”.

Van der Merwe and Krygsman found in an earlier paper that “an increase in travel cost and travel time decreases the employment search space of individuals and results in limited access to work opportunities”.

In the recent paper, using panel datasets, a fixed-effect model, and a regression analysis, the researchers found that for every index point increase in public transport CPI, the number of discouraged work seekers, as a percentage of the labour force, increased by 0.057 percent.

The researchers conceded that factors such as household, individual and geographic characteristics could explain changes in discouragement. However, they assert that consumer price does have “a small, but significant impact on discouragement within South Africa”.

“Understanding the impact of transport cost and affordability on job search can assist with strategies to reduce discouragement and long-term unemployment,” the researchers concluded.

ENDS

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