The DPRU’s successful Working Paper series has a broad target audience, including fellow academics and researchers (both local and international), students, representatives from civil society and the business community, the media, as well as policy-makers and government officials.
The majority of these papers represent socioeconomic research on labour market issues, poverty and inequality. A Working Paper traditionally seeks to answer a specific research-focused question, and routinely includes a literature review, in-depth study and analysis of data, a presentation of results, and one or more research conclusions.
This is the first study to consider the effect of minimum wages on employment in Mauritius specifically. Using data between 2004 and 2014, we find that a 10% increase in the minimum wages brings about a slightly positive effect on employment in the covered sector.
The services sector in South Africa is diverse and intertwines with the functioning and transformation of the economy in diverse ways. This report aims to examine the impact and potential of generating a services industry-led growth path in South Africa.
This paper serves to present a snapshot of the current profile of Small, Medium and Micro Enterprises (SMMEs) in South Africa as well as the key inhibitors of growth for SMMEs: evaluating the endogenous and exogenous impediments to growth.
To understand the role that structural change has had on inequality in the labour market this paper provides an overview of key labour market trends in the post-apartheid era followed by an analysis of labour demand trends, and structural transformation.
This report, produced as a background paper to the World Bank Systematic Country Diagnostic (SCD), provides an detailed overview of the Seychelles labor market, highlighting the relationship between changes to the overall structure of the economy and employment levels. Our analysis suggests that future economic growth in the Seychelles is dependent on increasing overall labor absorption levels in a manner which ensures that high quality employment opportunities grow at a sufficient pace to absorb the rising number of labor force participants.
Common correlates of crime, such as unemployment, poverty, and inequality, are at extreme levels in South Africa – making the investigation of the determinants of crime highly pertinent. We combine published crime statistics with demographic data from the 2011 South African Census Community Profiles to investigate which socio-economic factors attract crime at a police precinct level.
The impact of ICTs on the employment prospects of those in SSA have been poorly recorded. This paper models the impact of ICTs on the employment outcomes of individuals in 12 African countries, taking into account the varying nature of self-employment compared to other types of third party employment.
A key source for more and better types of jobs is the labour intensive manufacturing sector, but we find that compared to other sectors of the economy, the South African manufacturing sector has performed poorly, both in terms of GDP growth and job creation.
The paper uses longitudinal data for South Africa to explore the magnitude of social progression among people living within informal settlements compared with the residents of rural areas and formal urban areas. The objective is to assess whether shack settlements foster or frustrate human progress in the way they link people to the services, contacts and livelihoods concentrated in cities.
Why some countries choose a combination of highly protective laws and little enforcement is a puzzle that cannot be rationalized with traditional explanations. This paper collects administrative, legal and household survey data to emphasize a stylized fact about labor regulation that has been generally overlooked – countries with more protective employment regulations tend to enforce these regulations less, and usually focus their enforcement efforts on large firms.
This paper sets out to update the impression of vulnerability in the labour market, by examining how low pay and informality interact with each other, and with poverty. Throughout, we try to include comparative results from within the sub-Saharan Africa and Latin American regions. What becomes clear is that a job alone is not a solution to poverty in South Africa. And informality in South Africa plays an important role as a buffer to unemployment in contrast to the higher levels of voluntary informality in Latin America.
This report is divided into Part I: a quantitative analysis of the feasibility of a national minimum wage for South Africa (completed by the DPRU); and Part II: a qualitative analysis that investigates how a national minimum wage might affect young people’s labour market outcomes in South Africa (completed by the CSDA). The DPRU was commissioned by the Department of Labour to provide an analytical and empirical rubric, with which a more informed and nuanced decision could be taken around the promulgation of a NMW for South Africa.
Disappointing job creation in Sub-Saharan Africa (SSA), despite improved economic growth, is drawing greater attention to the labor market. Recent research has highlighted the paucity of formal employment and large disparities between formal and informal sector incomes. Formal private sector wage employment has grown too slowly to offset declines in public sector employment and to keep up with labor force growth, so employment remains overwhelmingly informal, with very low wages, no benefits or job security, and hazardous working conditions. The question arises as to whether labor market regulations play a role in limiting formal sector employment creation.
Sub-Saharan Africa’s (SSA) bilateral trade and cost competitiveness with China shows an extraordinary imbalance in the structure of trade, in that China overwhelmingly exports manufactured products to SSA and almost exclusively imports primary products in return. African relative unit labor cost (RULC) levels have generally been very high relative to China, but declined over the 2000s as China’s wages have risen faster than Chinese productivity, while the reverse is true for some SSA countries. Generally high RULC along with weaknesses in the business climate suggest that most SSA countries are unlikely to be competitive in labor-intensive manufacturing any time soon.
This paper reflects on possible early lessons for wage-setting regimes in the region, and the research agenda to inform the policy makers on key trade-offs in minimum wage setting. The release of country-level earnings and employment data at regular intervals lies at the heart of a future country-focused minimum wage research agenda for Africa.
Recent studies on poverty trends in South Africa suggest that poverty increased in the 1990s, before a continuous downward trend took place after 2000. This study augments the income and expenditure-based literature by examining poverty trends using household assets and services. We consider numerous private assets, household service variables, and educational attainment in order to derive a non-income welfare index.
The informal sector is often associated with micro- and family-based firms. In West Africa, however, some informal firms are very large. Based on detailed surveys and interviews carried out in Benin, Burkina Faso and Senegal, we compare the characteristics of formal, large informal and small informal firms.
This paper examines the impact of exchange rate fluctuations on sectoral employment in South Africa from 1975 to 2009. Overall, following a real exchange rate appreciation, the results show strong support for a negative and significant employment decline in the tradable sector, limited evidence of a positive employment impact in the non-tradable sector and generally no effect on aggregate employment.
Most developing economies yield positive economic growth simultaneously associated with little or no change in non-income welfare. This paper estimates the extent to which non-income welfare has improved in South Africa since democracy.
This paper provides a historical overview of the South African trade union movement before and after the end of apartheid. Labour market legislation and institutions formed since 1994 are discussed, with an evaluation of the impact of trade unions and wage legislation on labour market outcomes in South Africa.
As the 20th anniversary of the transition to democracy approaches in 2014, the economic policy debates in SA are in full flow. The forthcoming Oxford Companion to the Economics of South Africa contributes to the policy and analytical debate by drawing together perspectives from leading economists working on SA.
Theory predicts that an increase in employment protection may reduce employment levels by acting as a tax on firms by constraining hiring and firing decisions. We use a unique administrative database of the country’s dispute resolution body – the Commission for Conciliation, Mediation and Arbitration (CCMA) – to create a nuanced and empirically based measure of employment protection for the labour market in South Africa.
This study, primarily descriptive in nature, is one of the first to examine the claiming behaviour of unemployment benefit recipients within the South African Unemployment Insurance Fund (UIF) system. In the period between 2005 and 2011, those with the lowest potential claim periods were also subject, on average, to lower absolute benefits compared to their wealthier counterparts.
One Achilles’ heel of post-Apartheid South Africa is the growing intra-racial income inequality, particularly among Africans. This paper examines the role of labour unions in explaining this phenomenon among African men given that labour markets are at the core of income inequality in South Africa.
The inflation crisis of 2008 drew greater attention to the varying experiences of inflation in South Africa and, in particular, to the fact that different groups within society may have significantly differing inflation experiences. The groups may be defined according to income level, but may also be categorised according to demographic, labour market and other characteristics.
Based on 2005 estimates of National Transfer Accounts for South Africa, this paper investigates the resource flows across ages within the generational economy. The paper provides estimates of the lifecycle deficit and describes the financing of the deficit. The final section of the paper discusses the first and second demographic dividends and looks at potential policy options that would help the country maximise the benefit that arises through the demographic transition.
Despite the explosive growth in the number of people receiving disability benefits in South Africa, very little is known about the labour supply effects of the disability grant (DG). This study investigates the impact of disability grant receipt on labour force participation. Consideration is given to potential bias that may arise from unobserved confounding factors.
This paper investigates the role of demographic, community and macroeconomic effects on Disability Grant programme (DGP) participation. The study descriptively analyses demographic patterns of the disability grant (DG) beneficiaries using data from the 2002 to 2007 rounds of the General Household Survey (GHS). The decision to participate in the programme is empirically examined by probit techniques using data drawn from the 2007 wave of the GHS.
This paper attempts to investigate the impact of sectoral wage laws in South Africa. Specifically, we examine the impact of minimum wage laws promulgated in the Retail, Domestic work, Forestry, Security, and Taxi sectors using 15 waves of biannual Labour Force Survey data for the 2000-2007 period.
This paper attempts to understand some of the key drivers of employment and earnings trends within the South African labour market in the 15 years following the demise of apartheid. A number of factors are discussed which feature in the understanding of South Africa’s labour market dynamics in general, and its high unemployment levels in particular.
The post-1994 period in the South African economy is characterised, perhaps most powerfully, by the fact that the economy recorded one of its longest periods of positive economic growth in the country’s history. One of the more vexing issues within the economic policy terrain in post-apartheid South Africa though, has been the impact of this consistently positive growth performance on social welfare.
I provide six possible employment creating policy options within the arena of principally, but not exclusively, active labour market policy. The notion is that interventions in these areas should provide for short-term and possibly long-term employment creation avenues and options for the currently unemployed.
Assessments of the impact of minimum wages on labour market outcomes in Africa are relatively rare. In part this is because the data available do not permit adequate treatment of econometric issues that arise in such an assessment. This paper attempts to estimate the impact of the introduction of a minimum wage law within the Agriculture sector in South Africa, based on 15 waves of the biannual Labour Force Survey (LFS), starting in September 2000 and ending in September 2007.
We estimate the gender wage gap for Africans in post-apartheid South Africa over the 2001 to 2007 period. Separate male and female earnings equations yields no significant decline in the conditional wage gap, regardless of whether we correct for selection into the labour force and employment or not.
This paper investigates the take-up rate or claim-waiting rate of the unemployed under the South African Unemployment Insurance Fund (UIF) system. The goal is to identify disincentive effects that income replacement rates (IRR) and accumulated credits may have on the claimant‟s behaviour in terms of their claim waiting period rate (or how quickly they apply for UIF benefits).
The literature on the union wage gap in South Africa is extensive, spanning a range of datasets and methodologies. There is however little consensus on the appropriate method to correct for the endogeneity of union membership or the size of the union wage gap. Furthermore, there are very few studies on the bargaining council wage premium in South Africa due to lack of data on coverage of employees under these agreements.
This paper attempts to estimate the causal effect of government enforcement on compliance with minimum wages in South Africa, a country where considerable non-compliance exists. The number of labour inspectors per capita is used as a proxy for enforcement, whilst non-compliance is measured using an index of violation that measures both the proportion of individuals violated, as well as the average depth of individual violation.
What prevents the unemployed in Khayelitsha, South Africa from trying self-employment? Perceptions of a small group of academic economists are presented and compared to the perceptions of unemployed Khayelitsha residents themselves.
Minimum wage legislation is central in South African policy discourse, with both strong support and strong opposition. The validity of either position depends, however, on the effectiveness of minimum wage enforcement. Using detailed matching of occupational, sectoral and locational codes in the 2007 Labour Force Survey to the gazetted minimum wages, this paper presents, we believe for the first time, estimates of minimum wage violation in South Africa.
One of the key interventions aimed at improving the welfare of South African households has been local government’s provision of a package of free basic services (FBS) to poor households. It is, however, not completely clear how different municipalities identify households which are eligible for FBS. Evidence suggests that many municipalities currently provide services to all households with a monthly income of less than R1500 per month.
This paper is based on data from interviews with a number of mostly Western Cape based companies and employees with the objective of understanding the barriers to the achievement of employment equity for African people.
Even though the South African economy is formally categorised as an upper-middle income country, it has one of the highest unemployment rates in the world. The economy’s unemployment rate stands officially at 26.7 per cent and 38.8 per cent. This characteristic, more than any other, has placed market regulation high on the agenda of pertinent policy issues in South Africa.
Analysis using data from the 1995 and 2000 Income and Expenditure Surveys has found a significant increase in income inequality over the period and, further, that this increase in inequality eroded any significant poverty-reduction gains from higher economic growth.
This paper, while broadly located within reforming the labour market policy debate, is specifically focused on one aspect of the labour regulatory regime, namely the dispute resolution system. Hence, we attempt to understand the efficiency and effectiveness of the country’s institutionalised dispute resolution body, the Commission for Conciliation, Mediation and Arbitration (CCMA).
During 2006 and 2007, a selection of research papers, in the main written by labour law experts, have provided critical input and guidance on the nature of the debate around the efficiency of the labour regulatory environment in South Africa.
The role of bargaining councils, the central pillar of collective bargaining in South Africa, in the formation of wages is important in the context of high unemployment rates in South Africa. In this study we find that while institutionalised collective bargaining system covered substantially more formal sector workers in 2005 (30 percent) compared to 1995 (15 percent), this still meant that less than a third of the formally employed were covered by bargaining councils.
This paper reports on research that involved the analysis of 873 Commission for Conciliation Mediation and Arbitration (CCMA) arbitration awards sampled from unfair dismissal and unfair labour practice cases for the years 2003 to 2005. The sample of awards was selected in proportion to the case load of each of the Provincial offices of the CCMA.
In brief, the paper firstly summarises old and new theoretical and technical issues on measuring poverty, secondly analyses poverty from different perspectives and highlights various research findings on poverty trends in South Africa and thirdly clarifies the notion of ‘second economy’ and attempts to ‘measure’ it.
The paper argues that significant progress has been achieved by SETAs and the Skills Development system.
The World Bank’s Doing Business survey seeks to measure and compare the costs to business of various types of regulation, including labour regulation. As such it is an important driver of labour market ‘reform’ globally and in South Africa. It may also be encouraging a tendency of different systems of regulation to converge.
The research examines the current state of collective bargaining, the nature of existing bargaining structures, alternative models that have developed, and the problems being experienced in the current system.
By monitoring the price changes experienced by some representative household, consumer price indices provide an important measure of changing purchasing power within a given economy. Group price indices offer one method of more accurately reflecting the inflation experiences of specific types of households, such as poor households, elderly households or households with children, for example.
The objective of this study is to provide a comprehensive measure of shifts in welfare in post-apartheid South Africa by examining changes in both income and non-income welfare between 1993 and 2005. Research considering the changes in non-income welfare in the post-apartheid South Africa has found significant increases in the levels of non-income welfare, driven to a large extend by the increased delivery of basic services by government since 1994.
Rapid increases in government expenditure on social security between 2000 and 2006 has further increased poor households’ reliance on welfare grants and has been important in the fight against poverty. Already there is evidence of a substitution taking place within the social budget: expenditure on education and health seems to have declined in favour of increased welfare transfer expenditure.
This country study evaluates the experience of the South African economy with respect to growth, poverty and inequality trends since the advent of democracy in 1994.
Setas - A Vehicle for the Skills Revolution?
Sector Education and Training Authorities (Setas), established in terms of the Skills Development Act, 97 of 1998, were launched amid much fanfare and expectation of delivery towards achieving a skills revolution in the country.
This paper aims to place, in the South African policy context, selected issues from the international literature on skills training. The main lessons are that skills training resembles education in being partly a public good.
The major cause of poverty is unemployment. This paper looks at aspects of the way government responds to claims that are made, chiefly by academics, about poverty and unemployment. Official statistics on poverty and unemployment enjoy little favour among senior politicians and civil servants.
This paper conducts a review of the literature on skills shortages in South Africa. It is demonstrated that different Government departments have different views concerning the definition of skills shortages. This is largely due to the omission in any official government literature of tying the concept of “skills shortages” to productivity.
This paper investigates the relationship between education and unemployment in post-apartheid South Africa, and probes the argument that employment growth has been inhibited particularly by skills constraints. We use probit regression analysis to show that higher education protected against unemployment in both 1995 and 2003, and that overall, the relative benefits to tertiary education rose over the period.
This paper is a response, from a business perspective, to Halton Cheadle’s concept paper titled ‘Regulating flexibility: Revisiting the LRA and the BCEA’ (DPRU Working Paper 06/109). This paper seeks to respond to each of the issues raised by Cheadle, and to his reflections on each. As previously noted, the paper has been drafted to present a business perspective.
The objective of this report is to provide an overview of the changes in the status of women in the South African labour market between 1995 and 2005. The report finds that the feminisation of the South African labour force between 1995 and 2005 has been driven specifically by greater numbers of African women entering the labour force.
This paper examines South African wage earnings trends using all the available post-1994 household survey datasets. This allows us to identify and address the sources of data inconsistencies across surveys in order to construct a more comparable earnings time series.
This paper welcomes the fact that the discussion about the labour market and small business has broadened in scope. It considers some of the suggestions made by Cheadle (2006) in his recent concept paper. These include dismissals, unfair labour practices, appointments and promotions and collective bargaining.
The paper reflects on the findings from a firm survey conducted among twenty of South Africa’s largest firms across a range of sectors. The survey formed part of research conducted by the Development Policy Research Unit on graduate unemployment in South Africa.
There is consensus among analysts that South Africa’s unemployment is structural in the sense that the unemployed generally possess lower skills than what is required in the marketplace. In the context of increasing demand for skilled workers due to technical progress and the need to become more competitive globally, graduate unemployment would be expected to fall.
The paper specifically examines: labour regulations and their relationship with employment and investment; trade regulations; permits and licences for businesses; visa regulations; the predictability of regulatory application; and the costs of regulation. It also investigates the ways firms respond to regulations.
The paper aims to identify the impacts of sector-specific policies and regulations on the growth of – and job creation by – SMEs in eight sectors of the South African economy. Where appropriate and, where possible, impacts are quantified. The aim is also to develop suggestions for policy changes and regulatory reforms which would reduce the regulatory cost burden on these SMEs and permit them to grow and take on workers more readily.
The past two decades have witnessed an unprecedented globalisation of trade in goods and services. This process has been driven, inter alia, by technology, ideology and the availability of relatively cheap energy. By extrapolating this trend, one may expect further integration of world markets and increasingly unhindered international trade.
The study involves a statistical analysis of the case management system (CMS) data base of the Commission for Conciliation Mediation and Arbitration (CCMA) for the financial years 2001/2, 2003/4 and 2004/5.
The object of the paper is to identify the conceptual underpinnings of the labour law reforms of the 1990s, particularly the concept of regulated flexibility, and the changes to the labour market since then in order to review the performance of those reforms and to propose changes to more appropriately regulate that market.
The aim of this study is to provide an analysis of the shifts in non-income welfare that have occurred over the period 1993 to 2004. This analysis serves as a complement to existing research which has focused on shifts in income poverty and inequality in the post-apartheid period. In addition, the study is one of only a few that provides a complete overview of the first decade of democracy by means of the comprehensive time period it covers.
The regulatory impact of municipalities on small enterprise is inextricably linked to their developmental and service delivery roles. A general lack of information about municipal regulations and their enforcement was also discerned among the small businesses interviewed.
The research examines the different forms of regulation of conditions of employment (i.e. bargaining council agreements, the Basic Conditions of Employment Act (BCEA), and sectoral determinations) and what sort of accommodation they make for small firms.
Regulatory compliance costs impose a deadweight burden on firms and therefore should be minimised. In achieving this goal, it is necessary to embrace a process of smart regulation, rather than focus on deregulation. Tax compliance cost is one type of regulatory costs that is often viewed to have a large negative impact on SMMEs.
Using a constructed data series and another data series based on the All Media and Products surveys (AMPS), this paper explores trends in poverty and income distribution over the post-transition period. To steer clear of an unduly optimistic conclusion, assumptions are chosen that would tend to show the least decline in poverty.
This paper seeks to investigate some of the changes that have occurred within the South African labour market in the post-apartheid era between 1995 and 2004 and some of the challenges the labour market presents in the attainment of shared growth, updating previous work by Bhorat and Oosthuizen (2004).
The idea of a second economy has become a feature of recent government economic policy. In this paper we focus on one important element of the second economy – the informal economy. We analyse the nature of the informal economy in South Africa, providing some descriptive statistics and analysis to highlight the nature and extent of the informal economy.
This is an overview of poverty and well-being in the first decade of post-apartheid South Africa. It is an introduction to a volume that brings together some of the most prominent academic research done on this topic for the 10-year review process in South Africa. This overview highlights three key aspects of the picture that the detailed research paints.
This paper seeks to investigate how the demography of households relates to individual labour market outcomes. We comprehensively examine household size and structures in the October Household Surveys 1995, 1997, 1999 and the Labour Force Surveys September 2001 and 2002.
Minimum wages have been in place for South Africa’s one million domestic service workers since November of 2002. Using data from seven waves of the Labour Force Survey, this paper documents that the real hourly wages, average monthly earnings, and total earnings of all employed domestic workers have risen since the regulations came into effect, while hours of work per week and employment have fallen.
This paper argues that the economic literature on unemployment and poverty in South Africa has under-explored potentially important feedback mechanisms which, because they serve to change the structure of labour markets and affect human capital trajectories, serve to endogenise labour market exclusion.
In this paper we investigate labour market trends in South Africa between October 1995 and March 2003. In particular, we evaluate the South African governments claim that over this period, the economy created two million net new jobs. Using the same household survey data as that used to generate official employment estimates, we also find an almost two million net increase in employment.
Subjective Well-being Poverty versus Income Poverty and Capabilities Poverty?
The conventional approach of economists to the measurement of poverty in poor countries is to use measures of income or consumption. This paper asks: to what extent are these different concepts measurable, to what extent are they competing and to what extent complementary, and is it possible for them to be accommodated within an encompassing framework?
Using a South African data set, the paper poses six questions about the determinants of subjective well-being. Much of the paper is concerned with the role of relative concepts. We find that comparator income – measured as average income of others in the local residential cluster – enters the household’s utility function positively but that income of more distant others (others in the district or province) enters negatively.
The paper analyses poverty and inequality changes in South Africa for the period 1996 to 2001 using Census data. As regards population group inequality, within-group inequality has increased; while between-group inequality has decreased (inequality has also increased in each province and across the rural/urban divide).
Since the demise of apartheid, the South African economy has undergone significant changes with the government implementing various policies aimed at redressing the injustices of the past, fleshing out the welfare system and improving competitiveness as the country becomes increasingly integrated into the global economy.
This paper examines, through the application of available data, the poverty, inequality and labour market challenges facing Sub-Saharan Africa (SSA). The paper illustrates that apart from levels of poverty and inequality that are inordinately high in SSA, the region is also beset with perhaps the more worrying problem of accounting for almost all of the world’s ultra-poor: namely those individuals living on less than half of the standard $1 a day poverty line.
This paper estimates an earnings function where the dependent variable is a mix of point and interval data using an interval regression model based on a pseudo-maximum likelihood estimation procedure. The analysis uses the 1999 OHS, and takes into account point and interval income observations, as well as design features of the survey including stratification, clustering and weights.
The focus of this study is on household income generation among previously disadvantaged households in South Africa. Households’ income sources are divided into categories that reflect differing extents of association with the core economy.
Simulations suggest that under the most optimistic conditions, halving the official rate of unemployment would require 3.7 million jobs to be created between 2004 and 2014. Halving the number of expanded unemployed under pessimistic assumptions about the growth rate of the economically active would require 11 million jobs in the same period.
Gauteng, South Africa's economic powerhouse, has long been dependent on immigration to supply its labour requirements, a phenomenon deeply rooted in the province's early economic history and the development of mining and heavy industry. Although migration has contributed to the development of the province, it also poses challenges to the provincial government partly through the added burden on state-financed services and programmes.
Firstly, the paper at tempts to identify the features that distinguish the affluent and specifically the black affluent from the rest of the population with a descriptive analysis. The paper investigates how affluence predictors vary between different race groups. It shows a dramatic increase in black affluence.
South Africa lost more than 890,000 jobs, but saw an increase in the number of skilled workers from 1989 to 1999. We argue that this is the consequence of well-documented acute apartheid-era distortions which led to a current coordination failure where (i) firms are locked into a mostly skillintensive technology where they have very little demand for semi-skilled and unskilled labour, and (ii) there are too few semi-skilled and skilled blacks.
This paper investigates the relationship between labour productivity, average real wages and employment in South Africa’s manufacturing sector, using cointegrating VAR and VECM econometric techniques. A long-run equilibrium relationship was found between real wages and productivity, with an elasticity of 0,38 indicating that productivity has grown more rapidly than wages.
There has been a dramatic increase in the labour force participation of women in South Africa since the mid-1990s. Male participation has also been increasing but at a substantially slower rate, such that a feminisation of the labour force has occurred, mirroring a more general global trend that has been occurring since World War Two.
This study, through an exploratory but promising methodology, provides a tentative analysis of the relationship between HIV, poverty and labour markets. The paper illustrates that the relationship between poverty, labour markets and HIV is not homogenous but multi-dimensional in character.
The paper attempts to provide a descriptive overview of absolute and relative shifts in labour demand in the South African economy over the post-apartheid period, 1995-1999. The paper debunks the myth that the domestic economy is characterised by ‘jobless growth’ in this period.
The current misalignment of labour supply and demand in South Africa constitutes one of the factors that hold back the countrys economic growth. Consequently, efforts have recently been made to estimate future labour demand so that current policies are designed in such a way as to attempt to minimise the skills mismatch.
This paper documents the phenomenal contribution that technikons have made to the development of human resources in South Africa, particularly high level human resources throughout the period of the 1990s. This is done by examining the enrolment and qualifications profile of technikons over a fifteen year period.
The workplace training dispensation that is evolving in South Africa represents a significant advance over previous initiatives in the country. While it is funded on the basis of payroll levies, the relatively sophisticated institutional structure in the administration of the system has caused delays in its set-up and operation.
Whilst much has been said about the employment effects of the privatisation of state-owned enterprises in South Africa, the debate has largely overlooked the impact of these events on the wage levels of those workers that retain their jobs in the restructuring process. This paper estimates earnings functions for workers in the South African economy to determine the impact of these changes.
The labour market is central in determining individual and household well-being in South Africa. Therefore, an understanding of earnings and employment dynamics is a key policy issue. However, the absence of panel data has constrained empirical work addressing these topics. This paper conducts such a study using a regional panel data set, the KwaZulu-Natal Income Dynamics Study (KIDS).
We develop a model where blacks in the private sector earn no returns to education if there are relatively too few educated blacks. Using a sample of black females in the late apartheid Kwa Zulu to control for labour market specific effects, we find that more than a fifth of labour market participants are self-employed. There are no returns to primary education and positive returns for the first two years of secondary education.
Through the use of the standard tools of poverty analysis, this paper attempts to firstly measure the minimum financial contribution required from the state to eliminate poverty in the society. Secondly, we measure the absolute and relative household poverty impact of instituting a universal income grant, set at different monthly values.
This paper attempts to redress the lack of research into temporary labour migration at a national level in South Africa. Using the 1993 Project for Statistics on Living Standards and Development and the 1995, 1997 and 1999 October Household Surveys, we explore three broad areas: the extent of labour migration over the period 1993 to 1999; the characteristics of migrant workers and how these have changed over time; and the economic ties that labour migrants have maintained with their households of origin.
Not surprisingly, the education system is widely perceived to be the major tool to overcome human capital and labour market inequalities in South Africa. This paper asks how well the education system accomplishes this goal. The first part of the paper examines human capital differentials between races and provides evidence of persistent race-based educational attainment and quality differentials.
This study uses three key South African national household survey instruments – the 1993 Project Statistics for Statistics of Living Standards and Development, the 1995, 1997 and 1999 October Household Surveys, and the September 2000 Labour Force Survey – to identify the problems involved in capturing information on who works in the informal sector and the kind of work they do.
Towards the end of 2000, a study was commissioned into the projected economic impact of the new Cape Town International Convention Centre. The study set out to measure the macroeconomic impact of the Convention Centre as well as identify industries that could be promoted by the existence of the Centre.
The paper considers the complex process of introducing a regime of shorter working hours in the private security sector in South Africa. While the process of reducing the working hours of security workers in 1999 was bold, there is potential for real gains and losses to be derived from the process and this depends on the system and levels of compensation that are negotiated for the period of transition to the new schedules in working hours.
The paper explores the inter and intra firm dynamics that are instrumental in shaping the determination of skills training within the South African labour market. The essential starting point is to show that the size of the enterprise and nature of the economic sector in which these enterprises operate, sets conditions on the regimes of enterprise training and skills development.
This paper explores some of the key issues related to FDI in Southern Africa. It takes a look at comparative patterns and trends of investment flows in developing regions (including the SADC). In addition, an account of the institutional and regulatory framework in the SADC region and consequences for investment flows into SADC, is provided.
This paper focuses on the clothing and textile industry in the SADC region, with specific reference to the locational characteristics and developments of these two industry sectors over the last decade. The study links the economic and spatial characteristics of the clothing and textile industries, looks at the current situation and analyses the drivers and barriers to industrialisation and location.
This working paper looks at clothing and textile trade in the Southern African Development Community (SADC). Clothing and textile production is important in terms of employment and development, and thus they have been priority sectors since the SADCC inception in 1980. Evidence of intra-regional trade is presented. The scope for increased trade is then discussed and transaction costs are examined as one of the major factors restricting this increased trade.
This paper examines the potential trade-off between growth in employment and growth in wages. In order to assess the trade-off between employment growth and real wage growth, we make use of a simple decomposition model, following Mazumdar (2000), in which real wage growth is determined by growth in real value added, employment growth, a trend in the wage share of value added and a relative price effect.
This paper sets out to investigate relative wages and wage dispersion for formal sector workers in the private and public sectors. The paper explicitly measures the size of the public sector wage premium and offers some reasons for its existence. It also attempts to document the changing pattern of wage differentials between public and private sector employees between 1995 and 2000.
This paper will seek to analyse the performance of the public sector in implementing affirmative action policies intended to promote employment equity. This will be done primarily by examining the pattern of changes in public sector employment over the past five years.
Significant declines in employment have coincided with trade liberalisation in South Africa stimulating many debates on possible causal relationships between the two. Existing research has, however, focussed on explaining employment trends rather than changes in the relative wage of less skilled to skilled labour. Further, the role of technology in influencing relative wages has been neglected.
The central theme of this working paper is the way that the racial wage hierarchy evolved in South Africa over the period 1993 to 1999 amongst full-time regular employees of normal working age, but excluding those in the primary sector and the defence forces.
Previous studies have indicated that there may be untapped potential for exports from non-SACU SADC countries to the SACU market. The share of non-SACU markets in exports to the rest of the world has been increasing while the SACU share has remained the same. Concerns have been raised that the size of the South African economy and the net trade surplus of the Customs Union relative to that of the other SADC members may lead to polarization within the region.
The textile, clothing production, sugar, and agro-processing largely account for intra-regional cross-border supply chains, and drives trade within the region. These industries hold potential for strengthening ties throughout the region by integrating value-added supply chains and intra-industry trade (IIT) across borders.
This working paper analyses consumer indebtedness among urban South African households. The theoretical basis of the topic lies within consumption theory, and the empirical exercises are conducted on Part Two of the October Household Survey – the Income and Expenditure Survey (Statistics South Africa, 1995) and an adjusted 1999 dataset constructed by Wefa Southern Africa.
Policy makers are well aware that creating jobs is an important priority if the health of our economy is to be preserved and improved. However, the first step towards a successful strategy of employment creation is an understanding of the labour market. Much attention has been devoted to analysing the unemployment/employment divide without sufficient attention being given to labour market participation itself.
An explanation of inflation that focuses on the costs of production, wages (or unit labour costs) plays a central role. In South Africa, the recent change to an inflation-targeting monetary policy framework and the relative strong role of trade unions has increased the need to understand and quantify the interaction between inflation and wages.
Spatial Development Initiatives (SDIs) form an integral part of the South African government strategy to attract investment. SDIs are claimed to be short-term and targeted undertakings to foster economic growth. This working paper reviews two SDI projects, namely the Maputo Development Corridor (MDC) and the West Coast Investment Initiative (WCII).
The paper puts forward a case for more attention to be paid to fundamental structural factors that will determine the scope and success of any regional integration initiative in the Southern African Development Community (SADC). The paper provides a review of current estimates of trade potential in the region and contrasts this with the author's own estimates of intra-regional trade.
The objective of this working paper is to highlight the major issues facing sugar industries in SADC. This is achieved within a framework that recognises the existence of distortions in global sugar markets. To this end, a conceptual framework whose central pillar is the existence of market distortions is presented. It is followed by a description of the characteristics of the SADC sugar industries and the kind of distortions that they face in the real world.
Apartheid in South Africa was formally discarded by the first free election in 1994. Prior to 1994, discrimination in the labour market was embodied in a number of policies (pass laws, occupational colour barring etc.). While such polices have been eliminated by the ANC government, it is likely that the eradication of racial wage discrimination altogether will be a lengthy process.
The aim of this working paper is to highlight the influence of South African trade unions on African and White earnings as well as their role in the reduction of wage inequalities and discrimination between these two groups. The econometric analysis utilises a 1997 microeconomic data set. Findings show firstly that the union wage premium for African male workers lies between 13 percent and 20 percent, depending on the methods used.
Maputo Development Corridor (MDC), what actors and stakeholders are involved in the policy- and decision-making processes, and draws some lessons for future development corridors and spatial development initiatives (SDIs) in the broader Southern African region.
This working paper applies the Foster Greer and Thorbecke (FGT) (1984) index of poverty measures to the subsistence fishing industry in South Africa in order to evaluate the impact of resource transfers on poverty. The sample of subsistence communities was identified by the Chief Directorate: Marine and Coastal Management of the Department of Environmental Affairs and Tourism.
The aim of this working paper is to investigate the optimal regulatory routes from a competition and public interest point of view for the South African water industry. The working paper presents the basic conditions of the water sector by outlining the main characteristics of water, providing an historical and international overview of water management in South Africa.
Launched in 1995, Spatial Development Initiatives (SDIs) are currently the main vehicle used by the South African government to promote regional development. SDI project(s) purport to be short-term and targeted attempts to stimulate "growth" by creating globally competitive spatial entities, new investment, infrastructural development and job creation.
The aim of this paper is to highlight wage trends and patterns in the South African labour market through examining wage premia and wage differentials. The analysis utilises data from the October Household Survey of 1995. Findings show that the regular race, gender and educational differentials arise when looking at median wages, with the racial wage gap being more severe than the gender wage gap.
The aim of this paper is to highlight key issues arising from regional trade integration in the Southern African Development Community (SADC) as well as the concomitant policies required to facilitate the trade process. The paper highlights issues pertaining to distribution effects arising from integrating unequal partners and the need for open trade policies in order to realise potential positive spillovers.
This paper utilises a basic simulation exercise to analyse the possible poverty and employment reducing effects, of instituting a minimum wage in the South African labour market. The simulation is undertaken for three groups of unskilled workers, namely domestic workers, farm workers and drivers.
For several decades the analysis of the so-called brain drain has been hampered by measurement problems. It is now recognised that the official figures significantly underestimate the extent of the brain drain phenomenon and its increase since the political changes in the mid-1990's. This paper, using data from various reliable sources, provides new statistical evidence on the size of the brain drain from South Africa.
The aim of this paper is to determine if macroeconomic policy convergence amongst member countries of the Southern African Development Community (SADC) is required for establishing and sustaining a free trade area (FTA). The paper also investigates whether a restraining mechanism is required in order to compel member countries to have compatible macroeconomic policies.
This paper provides an analysis of the effect of the Maputo Development Corridor (MDC) on freight flows between Mozambique and South Africa. By analysing the transport infrastructure of the MDC, this paper seeks to provide insight into the relationship between investment in infrastructure and economic growth.
The aim of this working paper is to contribute to a strategy for developing the high tech sector in the Cape Metropolitan Region (CMR) through a better understanding of the high tech firms that already exist.
The petrochemicals industry in South Africa has grown significantly over the past two decades, largely as a result of the expansion and diversification of the premier petrochemical producer - Sasol. This working paper examines the role that producer services have played in this growth.
The mining industry has been at the heart of South Africa's economy for over 100 years. This working paper explores an aspect of the mining industry that has received little attention - the producer services used in production. It finds that producer services are a key part of the mining industry, especially in the exploration and commissioning stages.
This paper outlines the recent labour market reforms in South Africa and discusses their likely impact on poverty and the working poor. Using an innovative framework developed elsewhere in the literature, the paper shows how labour market processes and outcomes can affect the level of household poverty in a country.
This paper sets out the methodological issues for the measurement of poverty before presenting a poverty profile of South Africa. It tests the sensitivity of the poverty profile to choices around the metric used to measure well-being, the equivalence scale used and the level of the poverty line.
Drawing on a comparative overview of the earnings function work on South Africa, this article presents an alternative and comprehensive model of earnings in the South African labour market. The paper uses the standard Heckman two-step approach in trying to model participation, employment and earnings.
The existing work on household poverty and inequality in South Africa has shown that poverty and inequality differ markedly by race, location, education, gender of the head, household demographics and household labour market participation. However, it is important to try and go further than this listing of key correlates and to give any indication of the relative importance of these dimensions.
This paper provides an analysis of the role of social policies in alleviating poverty in South Africa. In doing so, the paper assesses the contribution of education and social security in reducing poverty in the country.
This paper provides an analysis of poverty in South Africa by focussing on the labour market. It seeks to understand inequality and poverty in contemporary South Africa by analysing the main factors that have contributed to these socio-economic outcomes. The paper shows that poverty and inequality are still widespread in South Africa, and have their origins in the labour market.
This paper provides an institutional analysis of the South African Spatial Development Initiative (SDI) policy. It deals, firstly, with the concept of regional institutional structure, secondly, with the SDI program in South Africa and how it attempts to address national industrial strategy concerns in a spatially redistributive fashion, and thirdly, describes the case study of the growth-pole bulk-export port of Richards Bay.
Using the October Household Survey of 1995 (OHS95), this paper seeks to understand the determinants of indigence in the South African labour market. To this end the study presents a description of the labour market, focusing on how covariates such as race, gender, education and location help explain the poverty observed in the labour market.
The paper utilises a class of poverty measures to determine the potential cost to the fiscus, in 1995 Rands, of alleviating poverty in South Africa. The simulations are undertaken for both households and individuals in the society, by the different covariates of poverty.
This paper uses various decomposition techniques to understand the nature of household inequality in contemporary South Africa. It examines, firstly, the importance of race in overall inequality; secondly, the contribution of major income sources to national inequality; and thirdly, the relationship between inequality, poverty and the labour market.
This paper forms part of the DPRU Industrial Strategy Project: Phase Two.
This paper is the fourth in a series of issue papers prepared within the SDI Policy Programme. It aims to support and enhance the application of work already completed on economic empowerment and to guide/influence the planning and development processes applied in respect of each of the individual tourism led SDI's.
The cornerstone of the South African government's economic policy lies in the Growth Employment and Redistribution (GEAR) programme.
The research findings and policy recommendatons presented in this report owe their existence to the Industrial Strategy Project (ISP), who commissioned the study as a mechanism for providing input into the Spatial Development Initiative (SDI) policy framework nationally.
This paper has been prepared as part of the Spatial Development Initiatives (SDI) policy research program.
The concept of tourism led socio-economic developemnt in not new or peculiar to South Africa, and international experience and best practise are being assessed as part of the SDI Policy Programme (Agri-tourism SDI's).
The two companies chosen for this study were chosen specifically to explore how companies, facing similar competitive pressures, have decided to respond.
The essence of the story is that this is a factory with a heartbeat. There is a constant focus on product development, quality and cost. Communication is high on the list of objectives. There is a joint definition of productivity as a state of mind, a collective will to improve and a general belief in the human desire to do better.
In an article published in the Harvard Business Review in 1989, Magaziner et al give a compelling description of the entry of the Korean conglomerate, Samsung, into microwave oven production in the early 1970's.
The debate on industrial policy is often counterposed between two truisms.
This paper, as part of teh Industriap Strategic Project (ISP) Phase Two, Sectors, Clusters and Regions Project researches the effect of industrial restructuring in the town of Newcastle, KwaZulu/Natal.
The aim of this research project is to determine the role that institutions, including government at all levels, could play in bolstering economic performance in sectorally and geographically concentrated manufacturing firms, and to examine whether such initiatives can form part of a regional industrial policy.
Dating back several decades, and shaped by the history of the region, the clothing industry in Durban is unique in its relationships, functioning, institutions and prodpects. But it is also one of the largest concentrations of clothing manufacturers in the country.
In terms of economic development, regional and local government strategies in South Africa (SA) have focused on the attraction of foreign direct investment and promoting tourism.
The South African Fruit Processing Industry: Is the Climate Ripe?
The previous government's Regional Industrial Development Policy (RIDP) was premised on a logic of dispersion. This policy resulted in the relocation of labour-intensive industries to the homelands and other 'deconcentration points'.
This paper surveys the new government's inheritance with respect to science and technology (S&T). Based on an assessment of that inheritance, the author defines the likely policy objectives of the new government and outlines how goverment will seek to restructure the S&T system to meet the new policy objectives.