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The Post-Apartheid South African Labour Market

Literature › Works

Haroon Bhorat; Morné Oosthuizen (2005). The Post-Apartheid South African Labour Market. DPRU Working Paper 05/93. Development Policy Research Unit, University of Cape Town.
Type working paper
Scope Post-1994 South African economy
Method descriptive quantitative
Period studied 1995–2002
Regions South Africa, Limpopo, Eastern Cape, KwaZulu-Natal, Western Cape, Gauteng
Themes labour markets wages, inequality poverty unemployment, transition post apartheid, education human capital, demography urbanisation, methods data sources, bantustans removals influx
Citation key bhorat2005

Argument

The paper documents how the South African labour market changed between 1995 and 2002. Employment grew by about 1.5 million, but the labour force grew much faster, mainly through rising participation by African women and young people. Unemployment therefore rose sharply, on both the narrow and broad definitions. The authors argue that 'jobless growth' is a misleading label, because the Survey of Employment and Earnings and Manpower Survey data behind it exclude agriculture and the informal sector. Household-survey data show total employment growing roughly in line with GDP. However, growth was skills-biased and unemployment is increasingly concentrated among Africans, women, the young and former homeland areas. It is also rising among the relatively well educated, and the unemployed are increasingly stranded in households without wage earners and dependent on pensions and grants. The method is descriptive comparison of the OHS 1995 and the LFS 2002:2, supplemented by probit estimates.

Evidence and method

Statistics SA October Household Survey 1995 and Labour Force Surveys 2000-2002, weighted with 1996 Census weights. Also the 1996 Census 10% sample, SARB Quarterly Bulletins, Manpower Surveys and the Survey of Employment and Earnings, Muller's (2003) informal-sector estimates, Department of Education enrolment data, and unemployment probits for 1995 and 2002.

Findings

  • Broad and narrow unemployment rates rose sharply between 1995 and 2002. (p. 6)

    The official unemployment rate has risen from 17.6 percent to 30.5 percent, while broad unemployment has increased from 30.8 percent of the labour force to 41.8 percent.

  • Employment grew by about 16 percent, but narrow unemployment more than doubled. (p. 6)

    total employment in South Africa expanded from 9.5 million to just over 11 million, an increase of around 16 percent and equivalent to a growth rate of 2.1 percent per annum.

  • Employment absorption was far below what was needed, and was much higher for Whites than for Africans. (p. 13)

    employment absorption has been significantly higher for White individuals at 66 percent. The EARs for Africans, Coloureds and Asians are 25 percent, 43 percent and 45 percent respectively.

  • The household-survey data cast doubt on the 'jobless growth' thesis. (p. 20)

    the simple output elasticity of total employment for the period 1995-2002 is positive 0.81, indicating that for every 1 percent growth in GDP, total employment increased by 0.8 percent.

  • The SEE data used to support jobless growth are flawed and omit key job-providing sectors. (p. 19)

    Data from the SEE is, therefore, not suitable to substantiate jobless growth. Firstly, the data suffers from a lack of coverage of two key job-providing sectors, namely Agriculture and the informal sector.

  • Employment growth was skills-biased, and the unskilled share of employment fell. (p. 26)

    the share of unskilled workers in the workforce declined by three percentage points, from 31 percent in 1995 to 28 percent in 2002, while the share of skilled and semi-skilled employment both increased

  • Tertiary-educated unemployment more than doubled, driven by African graduates. (p. 40)

    the tertiary educated unemployment rate more than doubling from 6.6 percent to 14.6 percent over the period. The large jump in tertiary educated unemployment is due largely to the rapid increase

  • Young people bear the brunt of unemployment, with rates above 68 percent for 15-24 year olds. (p. 40)

    In 2002, the unemployment rate for 15 to 24 year olds was 68.8 percent, falling to 30.0 percent for 35 to 44 year olds, and to 18.6 percent amongst 55 to 65 year olds.

  • Former homeland areas have the highest rural unemployment, and decentralisation had limited effect. (p. 34)

    previous governments' neglect of homeland areas continues to manifest itself in high levels of unemployment in those areas, while economic decentralisation policies seem to have had limited employment effect.

  • The unemployed are increasingly in households with no wage earners. (p. 41)

    In 2002, 3.9 million unemployed adults (48.6 percent of the total) were members of households without any wage-earners, up from 1.8 million (42.0 percent) in 1995.

  • Unemployment is chronic, with most of the unemployed never having worked. (p. 49)

    A disturbingly large proportion (62.5 percent) of the broadly unemployed has never been employed (see Figure 10). This amounts to approximately 5.0 million of the 7.9 million unemployed adults in 2002.