Abstract
This paper examines the contribution of three aggregate mining sectors of the South African economy to output and employment over the 1970-97 period. The finding of a declining importance of mining in output and employment creation must be sectorally differentiated. Gold and Uranium Mining is the chief source of these declines, while evidence for Coal and Diamond and Other Mining is more modulated. We find strong redistribution of output from equity to labour over the course of the 1990s for Gold and Uranium Mining. In mining labour markets, we present developments in employment trends, in real labour cost, and in labour productivity. We examine links between these dimensions in an explanation of changing employment trends. We conclude with a VECM estimation of a labour requirements equation to corroborate our findings
Highlights
Conventional wisdom views the mining sector of the South African economy as its quintessence
From earning less than half of net value added produced by the sector, labour obtains approximately 67 per cent of the net value added produced in the Gold and Uranium Mining sector
Examination of the evidence suggests that at best output levels of the South African mining sectors are a partial explanation of declining employment trends
Summary
Conventional wisdom views the mining sector of the South African economy as its quintessence. It is important to note that the decline in the importance of Gold and Uranium Mining in the South African economy, is one of a declining relative importance and one of falling absolute output levels in real terms when computed in terms of sectoral deflators (See Figure I). The reason for this lies in the gold price bubble of the early 1980s - which raised the purchasing power of the sector relative to the rest of the economy Despite this difference the suggested pattern of development in real output obtained from the two GDP deflators through the course of the 1980s and 1990s is much the same, with a consistent decline in real output reported in both series, and with both series reporting very similar levels of real output through the course of the 1990s (the correlation coefficient between the two series is +0.71 over this period). After peaking in the early 1980s (principally due to the gold price peak in the early 1980s), tax revenue from gold mining has declined sharply, and it contributes only approximately I per cent of total government tax revenues
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