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Fostering Technology Absorption in Southern African Enterprises
Skill shortages and high labor costs. Most of the firms interviewed identified the shortage of skills as the major factor currently restraining technology development. This finding is true for high-level skills as well as technical and artisanal skills such as drafting. Firms are of the view that the situation is getting worse, and particularly that the higher-level skills are even more difficult to access. The 2003 ES data corroborate this finding for the industry as a whole, where the skill shortage was the top concern among firms surveyed. Splitting the sample by exporter status and ownership status also yielded similar results, with skill shortage coming out as the top constraint (figures 2.1 and 2.2). This sector also suffers from a high cost structure, to which the high labor costs are a major contributor. A recent study comparing the auto assembly sectors in South Africa and Thailand concluded that Thai exporters enjoyed a 13.5 percent advantage on cost of sales over a South African exporter, 11.7 percentage
Figure 2.1 Top Constraints: Foreign-Owned versus Domestic Firms, South African Auto Component Sector 2.5
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constraints overall Source: Enterprise Survey (database), 2003 data.
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