Sustainability of Local Labour Market in South Africa: The Implications of Imports Competition from China

Abstract

Using South African manufacturing and non-manufacturing industry employment, imports from China, growth in manufacturing and non-manufacturing industry, and workers’ earning data, we examined the impact of imports from China, growth in manufacturing and non-manufacturing industry on manufacturing and non-manufacturing industry employment and workers’ earnings. This study employed a Bayer and Hanck cointegration test to examine the cointegration among the variables, which found the existence of cointegration. In addition, the ARDL approach was employed to ascertain the long-run effect of the import from China, growth in manufacturing and non-manufacturing industry on the manufacturing and non-manufacturing industry employment and workers’ earning, while “Fully Modified Ordinary Least Square (FMOLS)”, “Dynamic Ordinary Least Square (DOLS)”, and “Canonical Cointegrated Regression (CRR)” estimators were employed for robustness. We found a negative long-run effect of imports from China on manufacturing sectors’ employment and workers’ earnings, while a positive of its effect was found on service industry employment. Moreover, growth in the manufacturing industry was found to have a positive long-run effect on manufacturing industry employment and workers’ earnings, while it has a negative long-run effect on service industry employment. As for the growth in the service industry, it was demonstrated to have a negative and positive long-run effect on manufacturing industry employment and non-manufacturing industry employment.