Labour Demand in the Post‐apartheid South African Wine Industry

Abstract

AbstractIn 2013 the minimum agricultural wage in South Africa was increased by an unprecedented 51%. We use data on 77 Western Cape Province wine grape farms from 2005–2015 to estimate the impacts on employment. Previous post‐apartheid labour market reforms increased minimum wages substantially, but re‐entry to global markets after sanctions were lifted increased demand and this preserved jobs in the wine sector. However, by 2005 this demand growth had largely ceased. The long‐run wage elasticity for permanent employees was found to be −0.4, but for casual workers the figure was −4.7, so the 51% wage increase is likely to decimate casual employment in the future. Thus, the poorest and most vulnerable casual workers lose most in terms of jobs, incomes and secure livelihoods, whereas 80% of full‐time staff benefit from the higher minimum wages. Thus, the minimum wage change is likely to increase the gap between privileged permanent staff and casual workers. This result is not surprising in view of the long‐standing interdependence between farmers and their permanent workers in wine grape production.