South African Labour Market Research Articles

Labour Force Participation And Employment In South Africa: Evidence From Wave 1 Of The National Income Dynamics Study

The authors use wave 1 of the NIDS dataset to describe salient features of the South African labour market across different stages of the life cycle. These include a high unemployment rate for all ages, particularly amongst the youth. Low levels of labour force participation in general are observed, and labour force withdrawal amongst the elderly occurs at relatively early ages. We use multivariate regressions to consider how education, family support structures, unearned income and health measures correlate with these patterns. Poor health is one reason that people of all ages in South Africa leave employment and the labour force. Retrenchment is the most frequent reason that people who are not employed report for why they left their most recent employment. Several important questions about labour market dynamics will become tractable once more waves of the dataset become available.

Employee perceptions of the management of cultural diversity and workplace transformation

This study assesses managerial perceptions of the management of cultural diversity and workplace transformation in three production companies in Gauteng. A sample comprising 668 employees was drawn from a population of 1 259 (53% response rate) using simple random sampling and data were collected through self-developed questionnaires and personal interviews. Data were analysed using descriptive and inferential statistics. The results indicate that whilst the South African Transformation (SAT) Agenda has propelled change in the political and economic spheres, similar developments have not been realised in the South African labour market. Hence, based on the findings, recommendations are made to enhance the management of cultural diversity and workplace transformation, and the need for urgent government intervention, through legislative amendments, is emphasised.

Incoherence in the South African labour market for intermediate skills

This article is concerned with the production and employment of technically skilled labour at the intermediate level in South Africa. Three differing labour market pathways to intermediate skilling are identified. These are: the traditional apprenticeship route, the new ‘Learnerships’ pathway (similar to the ‘modern apprenticeship’ schemes adopted in the UK) and finally, further education and training college programmes in engineering and related technical fields. It is argued that in sharp contrast to the highly structured conditions of the artisanal ‘occupational labour market’ of yesteryear, the three training pathways that operate in South Africa today possess few linkages with each other or with employment. In addition, as access to opportunities in the labour market have opened up politically for black South Africans since the advent of democracy in 1994, so access to employment after training has weakened for this social grouping because of the lack of structured linkages between these pathways and employment, and more generally, because of the failure of the ‘new South Africa’ to create meaningful pathways from school to work.

REVISITING INFORMAL EMPLOYMENT AND SEGMENTATION IN THE SOUTH AFRICAN LABOUR MARKET

AbstractThis study revisits the definition of informal employment, and it investigates the puzzle of high open unemployment co‐existing with relatively limited informal employment in South Africa. We estimate earnings equations using data from the September 2004 Labour Force Survey and present evidence of persistent earnings differentials not only between formal and informal employment, but also between types of informal employment. These persistent earnings differentials are suggestive of complex segmentation in the South African labour market and challenge the presentation of informal employment as an undifferentiated residual with no barriers to entry or mobility.

The shape of demand for high-level agricultural skills in the South African labour market

A supply of high-level agricultural skills is foundational to the South African agricultural sector's capacity to improve the quality and range of agricultural products and services so as to support small agricultural producers, meet domestic needs for food security and increase the competitiveness of local products on global agricultural markets. Concerns about the coexistence of graduate unemployment and skills shortages in the agricultural sector prompt the question: What is the shape of demand for high-level agricultural skills in the South African labour market? To answer this, the authors conducted 83 interviews with respondents in private, public and non-governmental organisations involved in agriculture. The findings reveal a rising demand for high-level agricultural skills among farmers, farm managers and foremen; in research and product development; in the sales and marketing functions of firms supplying primary agriculture; in government entities across a wide range of occupations; and in public and private sector R&D. 1Respectively, Senior Researcher and Research Director, Education, Science and Skills Development (ESSD) Programme, Human Sciences Research Council (HSRC), Pretoria. The research on which this article is based was undertaken for the Department of Agriculture, and the findings presented in the article form part of an earlier report: A study on graduate outputs for agricultural qualifications in SAQA accredited higher education institutions over a ten year period (Paterson et al., 2005).

’n Teologies-etiese beoordeling van regstellende aksie

A theological ethical judgment of affirmative action In the period directly before and after 1994 much consideration was given to the position of the South African labour market. It was clear that some form of affirmative action had to be instituted. In this article different ways in which affirmative action has been applied since 1994 are studied, as well as the effects thereof. Affirmative action has made it possible for many workers to occupy positions that they otherwise would not have received. Other workers have been negatively affected by affirmative action. How should this be judged? In this article a number of Biblical principles regarding labour are posed. The current application of affirmative action is judged against these principles.

Public Expenditure and Poverty Alleviation in the South African Labour Market

The paper utilises a class of poverty measures to determine the potential cost to the fiscus, in 1995 Rands, of alleviating poverty in South Africa. The simulations are undertaken for both households and individuals in the society, by the different covariates of poverty. The study finds that the commitment required from the state to reduce poverty, is fairly modest, albeit within the realm of very strict assumptions. In addition, the paper illustrates that individual and household level data imparts differential poverty information, which is important for policy prescriptions. Finally, it is evident that for state targeting purposes, the nature of household poverty is fairly easily reduced to a small sub-group of labour market defined household types.

Correlates of Vulnerability in the South African Labour Market

Using the October Household Survey of 1995 (OHS95), this paper seeks to understand the determinants of indigence in the South African labour market. To this end the study presents a description of the labour market, focusing on how covariates such as race, gender, education and location help explain the poverty observed in the labour market. A key innovation of the paper is the application of traditionally household poverty measures to individuals in the labour market. Hence through utilising cumulative distribution functions drawn from the Foster, Greer, Thorbecke (FGT) class of poverty measures, we are able to understand the distribution of earnings within a stochastic dominance framework. Such distribution functions are then derived for a series of labour market categories ranging from employment by race to employment by sector and occupation. In addition, by setting two individual poverty lines, specific measures of poverty are also determined according to the different labour market cohorts. Some of the key results of the study are that farm workers and household domestic workers constitute the most vulnerable individuals amongst the employed. In addition, apart from race, gender and education are crucial determinants of low or zero earnings. Rural labour markets also surface as a key component of poverty in the labour force. Finally, there is sufficient evidence to suggest that a different labour market seems to be operating for Africans and Coloureds on the one hand, and Asians and Whites on the other.

The Post-Apartheid Labour Market: 1995-2004

This paper seeks to investigate some of the changes that have occurred within the South African labour market in the post-apartheid era between 1995 and 2004 and some of the challenges the labour market presents in the attainment of shared growth, updating previous work by Bhorat and Oosthuizen (2004). The two main sources of data are the October Household Survey of 1995 and the Labour Force Survey of September 2004. The paper has found that while the unemployment rate has risen over the period, total employment has increased, bringing into question the notion of jobless growth. Unemployment, however, continues to be concentrated in specific demographically and geographically defined groups, most notably rural dwellers, Africans, females, the poorly educated and the young and, for many, represents a long-term problem. Disturbingly, unemployment has continued to grow rapidly amongst relatively educated members of the labour force, despite the skills shortage faced by the country. An individual's probability of being employed is found to depend on his or her race, gender, age, location and level of education. However, it appears that gender plays less of a role in determining the probability of employment in 2004 than in 1995, although this is not true of race.

Women in the South African Labour Market, 1995-2005

Recent research has found that changing policies and attitudes and improved economic performance have impacted on the labour market dynamics for women and the increased feminisation of the South African labour force since the mid-1990s has been well documented. While employment has increased more rapidly for women than for men over the period, it has been suggested that women are overrepresented in low-income, less secure employment. In addition, insufficient jobs were created to absorb the additional entrants to the labour market and as a result women are also overrepresented amongst the unemployed. The objective of this report is to provide an overview of the changes in the status of women in the South African labour market between 1995 and 2005. The report finds that the feminisation of the South African labour force between 1995 and 2005 has been driven specifically by greater numbers of African women entering the labour force. Women benefited more from the increased demand for labour over the period than men, accounting for more than half of the increase in employment, with the bulk accruing to African women. In line with previous research it is found that the majority of women find jobs as unskilled and low-paid Elementary Workers. Female unemployment rates increased for all covariates, but African women and young women in particular struggled to find employment. When returns to employment are considered, it is clear that discrimination by gender and race remains. When real mean monthly earnings in 2001 and 2005 are compared it is found that women of all race groups earned less than men in both years, with the exception of Coloureds in 2005. African women, specifically, are undoubtedly the most vulnerable participants in the labour force, particularly if they are young and poorly educated. Even those African women who did find employment continue to earn considerably less than their White counterparts, with very large differences especially at the lower skills levels.

The dual labour market theory and the informal sector in South Africa

Purpose of the paper: The purpose of this paper is to revisit the dual labour market theory as far as the informal sector in South Africa is concerned. The hypothesis is that the dual labour market theory must be extended in order to be applicable to the informal sector of the South African economy. It is our view that within some informal occupations a further segmentation exists. Problem investigated: Among South Africa ’s grave socio-economic problems, unemployment is one of the most serious and intractable. An increase in informal and self-employment was experienced during the last decades. Traditional dual labour market theory maintains that jobs can be roughly divided into two groups: those with low wages, bad working conditions, unstable employment and little opportunity for advancement; and those with relatively high wages, good working conditions and opportunities for advancement. The problem that confronts researchers is that even within informal employment, further segmentation is possible. Approach: To determine whether the dualism, that described by the dual labour market theory, is also present within the informal sector itself, available data on a typical informal sector activity, namely car guarding, is analysed. This provides the evidence to achieve the objective of this paper. Findings and implications: The case study of car guards confirms that the dual labour market theory can also apply within the informal sector on the condition that it is expanded to make provision for a further segmentation of the periphery sector. This finding presents several important policy implications. A basket of policies is needed to address the problem of unemployment as effectively as possible. Value of the research: The paper provides further knowledge on informal employment in South Africa. This is an area that requires a lot of attention, given the importance of the informal sector in South Africa and Africa at large. It goes further than the traditional implications stemming from the dual labour market theory. Conclusion: The South African labour market is fragmented, consisting of a well-paid formal sector and the periphery that consists of workers in the informal sector, subsistence agriculture and the unemployed. Within the periphery, there is the possibility that a certain degree of dualism exists. The case study of car guards confirms that the dual labour market theory can be extended to make provision for this dualism, even within the informal sector.

Trade unions vs. statistical discrimination: Theory and application to post-apartheid South Africa

A simple model of statistical discrimination is analyzed, which captures some stylized facts of the South African labor market. It shows that this type of discrimination disappears when the wage rates are determined by efficient bargaining between a representative firm and a union, with endogenous membership. This may explain why the wage gap between Black and White workers in post-apartheid South Africa is smaller among unionized workers than among non-unionized ones.

Globalization and the labour market in South Africa

AbstractThe paper examines the impacts of globalization on labour in South Africa. A framework is developed to link different aspects of the process of globalization with labour market outcomes in developing countries. This framework is then applied to the South African case focusing on trade, foreign direct investment, technology transfer, macro‐economic policies and the impact on the bargaining power of labour. The paper concludes that although globalization is only one of the factors affecting the South African labour market in recent years, the outcomes for labour, particularly unskilled labour, have been unfavorable. Copyright © 2006 John Wiley & Sons, Ltd.

How Flexible are Wages in Response to Local Unemployment in South Africa?

It is commonly claimed that the South African labor market is unusually inflexible owing to the strength of the country's unions and the system of centralized collective bargaining. One sign of labor market inflexibility is low responsiveness of wages to local unemployment. Analyzing data from the South African Living Standards Survey, the authors find that the elasticity of wages with respect to local unemployment rates in South Africa in 1993 was about-0.1. The similarity of this elasticity to that found in other countries, including the United States and the United Kingdom, is surprising given South Africa's national unemployment rate of over 30%. The wage curve elasticity persists over a much wider range of unemployment rates in South Africa than in OECD countries, implying that unemployment in South Africa can have a large impact on wages.

Introduction: Where to for the South African Labour Market? Some 'Big Issues'

Where to for the South African Labour Market?Some 'Big Issues' Miriam Altman and Imraan Valodia The labour market landscape has changed dramatically over the first decade of democratic governance in South Africa. Of course, the most obvious change is extremely high and rising rates of open unemployment. This was partly caused by restructuring and capital intensification in traditional resource-based industries, without a concomitant growth in manufacturing or services. Historically, South Africa's formal work places were dominated by large public sector, industrial, mining and agricultural employers. This changed dramatically over the 1990s due to a combination of factors such as globalisation, product market liberalisations, intensified domestic competition arising from easier market entry, and greater alignment of labour market regulation. Services sectors, whether formal or informal, have been an important source of employment growth. People in part-time, temporary, home-based and externalised working situations can no longer be seen as 'atypical', but rather as the norm. There is now a 'diversity' of workplaces, and continuous movement of workers between work states - 'core' formal, 'non-core' formal, informal and unemployed. In the initial years of the political transition, the labour market was at the centre of economic policy processes. Very soon after the political transition, government appointed a Labour Market Commission to research and review options and to propose a framework for policy. Related to this, the International Labour Organisation (ILO) embarked on a comprehensive review of the South African labour market. Over this period, research interest was focused very much on 'big issues' - active labour market programmes, fair employment practices, affirmative action, workplace democratisation, fair labour legislation, and appropriate labour market institutions. This period was also characterised by far-reaching changes in labour policy with the enactment of the Labour Relations Act, the Basic [End Page 1] Conditions of Employment Act, the Skills Development Act, and the Employment Equity Act. Partly as a result of the availability of survey data, such as the Labour Force Surveys, research on the South African labour market in the latter parts of the 1990s and the early years of the new millennium tended to focus more on quantitative research, rather than on specific policy questions. Substantial attention was devoted to making sense of the seeming rise in open unemployment, growing labour force participation and the expansion of informal employment; and there has been much debate about the accuracy of the data. We would argue that there has not been sufficient work on broader strategic issues such as the institutional trajectory of the labour market since democracy, and the options for inclusive and sustainable reform. The papers in this special issue of Transformation were prepared for an initiative led by the Employment and Economic Policy Programme of the Human Sciences Research Council (HSRC) and Swedish International Development Agency (Sida) to explore these broader debates. We begin with a paper by Gus Edgren that situates South Africa in a global context, with comparisons drawn to Brazil, Mexico, Malaysia, Poland, Turkey and Slovakia. South Africa appears to differ in some important respects - particularly in relation to the slow rate of urbanisation despite the lifting of apartheid legislation, and the relatively small informal sector. Relative to these countries, SA experienced very slow per capita GDP growth rates in the 1990s, which partly explains the extremely high rate of open unemployment. Generally labour market analysis distinguishes the formal sector and the informal sector, with studies rarely considering them together. This project explicitly recognises the fluid boundaries between low-wage formal and informal work. The paper by Valodia et al reviews the character of low-wage formal and informal work, and then considers transitions between the two. This category of worker comprises the majority of the workforce: approximately 65 per cent of South African workers earn less than R 2,500 per month and 50 per cent earn less than R 1,500 per month. They are almost evenly divided between formal and informal employment. The paper by Miriam Altman shows that low waged formal workers have experienced a fall in real earnings since the mid 1990s. Valodia et al's paper shows substantial churning between employment states. While some workers experienced a positive upward move into the...

Perspectives on learnerships: a critique of South Africa's transformation of apprenticeships

This article provides a critique of South Africa's attempt to transform apprenticeships using data from the 2004 Baseline Survey of the Learnership Programme in South Africa. The data suggests that Learnerships provide important opportunities for those in work to learn new theoretical and practical capabilities and thus deepen the skills base of the South African economy. They also provide key avenues for unemployed people to gain skills and work experience and improve their employability. Moreover, incentives have been set sufficiently high to encourage employer participation. However, this high overall level of satisfaction with the Learnerships may mask some of the underlying differences in levels of satisfaction across the different strata of the South African labour market. Without controlling for other factors, there were substantial differences in the levels of satisfaction with Learnerships across the employed versus unemployed and National Qualifications Framework (NQF) level divides. This suggests that a number of key challenges remain which the architects of the policy need to urgently address, including a more equitable spread of Learnerships across both spheres of the dual economy and strengthening the administrative and oversight capacity of SETAs.

A critical evaluation of training within the South African national public works programme

This article explores the ability of the training and work experience offered under public works programmes to promote employment in South Africa. Public works are a key component of South African labour market policy and are ascribed considerable potential in terms of addressing the core challenge of unemployment. However, despite this policy prominence, the labour market impact of the training component of such programmes has not been studied systematically in South Africa, from either a theoretical or empirical basis, and this article attempts to provide an initial critique of the programme from both perspectives. This article outlines the unemployment situation in South Africa and the training component of the government's national public works programme, the Expanded Public Works Programme (EPWP), which was developed to enhance workers' skills and labour market exposure, and thereby improve their subsequent employment performance. Theoretical and empirical arguments are used to develop a critique of the training component of the programme, and the article concludes by arguing that, as currently conceptualised, the national public works programme is unlikely to have a significant impact on skills development or unemployment, due the structural nature of unemployment, excess supply of low and unskilled labour, and the high skills growth strategy adopted by government.

EMPLOYMENT, WAGES AND SKILLS DEVELOPMENT: FIRM‐SPECIFIC EFFECTS — EVIDENCE FROM A FIRM SURVEY IN SOUTH AFRICA

Acknowledgements The paper explores the inter and intra firm dynamics that are instrumental in shaping the determination of skills training within the South African labour market. The essential starting point is to show that the size of the enterprise and nature of the economic sector in which these enterprises operate, sets conditions on the regimes of enterprise training and skills development. While contesting the notion that there is inevitability in the outcome of these processes, the paper compels us to explore the reasons for it taking place in the present South African milieu. And this enables us to analyse the dynamic evolution of contractual obligations that are built on insecure and temporal employment relations. Consequently, the detour via the structural and organisation dynamics that are embedded within firms enables us to recognise the important role which training can command in promoting greater efficiencies within South African firms and halting the deleterious effects of insecurity and low productivity. The analysis leads us to the conclusion that training ultimately makes good business sense and more so if these sentiments are demonstrated and transmitted through active public policy. We would like to acknowledge the SDPU for commissioning this work and the European Union for funding it. We would also thank the SDPU for its intellectual contribution and for arranging access to the National Enterprise Survey data. Dr Stephen Gelb and the Office of the President were very cooperative in this regard. Finally, we would acknowledge the World Bank and TIPS for the World Bank survey data. Development Policy Research Unit Tel: +27 21 650 5705 Fax: +27 21 650 5711 Information about our Working Papers and other published titles are available on our website at: http://www.uct.ac.za/depts/dpru

How Do Migrants Fare in a Post-Apartheid South African Labor Market?

South African policies have historically emphasized employment as the reason for immigration. In post-apartheid South Africa, stories about how “immigrants take away our jobs” abound in the mass media, yet few empirical studies have been undertaken to examine the validity of this claim. This study looks at the relationship between migration status, nativity and labor force outcomes in the post-apartheid labor market. Our results suggest that migrants are more likely to participate in the labor force and to be gainfully employed than the indigenous population. Foreign migrants enjoy the highest labor force participation rates and employment rates in South Africa. South African-born internal migrants also have significantly higher labor force outcomes than do nonmigrants.

Documenting the Informalisation of Work in South Africa: Evidence from National Household Surveys, 1997–2001

Using data from selected national household surveys we demonstrate that most of the employment growth in South Africa since the late 1990s is the result of more individuals being employed informally. We also show that the informalisation of employment in South Africa has resulted in a decline in both nominal and real mean earnings of individuals who are informally employed, possibly due to occupational crowding. Finally, we explore the informalisation and casualisation of the labour market more broadly by examining the conditions of employment of all workers in the South African labour market. Our findings suggest that while the majority of workers involved in ‘informal’ employment experience poor employment conditions, there is also a significant proportion of ‘formal’ workers employed under conditions usually associated with informality.