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Research Gaps: Labour Market Function and Policy in South Africa (Final Report to Sida; Review of Labour Markets in South Africa)

Literature › Works

Miriam Altman (2005). Research Gaps: Labour Market Function and Policy in South Africa (Final Report to Sida; Review of Labour Markets in South Africa). Employment & Economic Policy Research Programme, HSRC (Sida-HSRC labour market review project). Human Sciences Research Council.
Type report
Scope Post-1994 South African economy
Method synthesis review
Period studied 1990–2005
Regions South Africa
Themes labour markets wages, inequality poverty unemployment, transition post apartheid, education human capital, methods data sources, unions strikes
Citation key altman2005a

Argument

This short report synthesises seven overview papers from the Sida-HSRC labour market review and identifies research gaps in post-apartheid labour market function and policy. It argues that the first democratic decade brought rising open unemployment, partly from capital intensification in resource-based industries without matching growth in manufacturing or services, and growing informalisation and 'non-core' work. Low-skill real earnings fell in the 1990s while high-skill earnings rose, and labour regulation and statistics have not caught up with new work arrangements. It cautions against deregulation and wage-cutting as competitiveness strategies, and calls for empirical evaluation of regulation, minimum wages, discrimination, training, active labour market policy and data. It is a gap-identification document, not a historical study of apartheid.

Evidence and method

Synthesis of seven commissioned overview papers (Edgren, Valodia, Altman, Benjamin, Moleke, du Toit, Vass), a 1995 bargaining-council coverage study, the Labour Force Panel 2000-2004, and an international round-table. No original data analysis in this document.

Findings

  • Open unemployment is very high and rising in the first decade of democracy, partly due to capital intensification in resource industries. (p. 6)

    This was partly caused by restructuring and capital intensification in traditional resource based industries, without a concomitant growth in manufacturing or services.

  • Slow per capita growth in the 1990s helps explain high open unemployment relative to comparator countries. (p. 6)

    Relative to these countries, South Africa experienced very slow per capita growth rates in the 1990s, which partly explains the extremely high rate of open unemployment.

  • Most workers are low-waged, split between formal and non-formal work. (p. 7)

    approximately 65% of the workers earn less than R 2 500 per month and 50% earn less than R 1 500 per month.

  • Churning between work states is substantial and mostly downward. (p. 7)

    In fact, 53% of low wage workers in the Labour Force Panel changed work status between 2000 and 2004.

  • Skill wage trends reversed between the 1980s and 1990s. (p. 9)

    Instead, low skill workers experienced a fall in real earnings and high skill workers large increases.

  • Bargaining council coverage and extension are limited, and exemptions are mostly approved. (p. 9)

    A study using 1995 data found that 15% of formal workers were covered by Councils directly, mainly in the public sector, mining and metals.

  • Unions narrow racial wage gaps within firms. (p. 9)

    On the other hand, unions seem to have the important impact of narrowing racial wage gaps within firms.

  • The public sector has a narrower wage gap and is the main first employer of black graduates. (p. 11)

    Black women earn 38% more in the public sector than in the private sector. The public sector is the main first employer of black graduates.

  • African secondary enrolment grew sharply, but schooling quality remains poor and higher education gains did not yield comparable earnings. (p. 17)

    Enrolment of Africans in secondary school rose by 329% between 1975 and 2000.

  • Labour statistics are too weak for reliable wage-employment-productivity analysis of the 1990s. (p. 16)

    It is difficult to reliably determine wage-employment-productivity relationships within South Africa's growth path for the 1990s.