Inequality and Economic Inclusion

Session 8A: Wage Dynamics

  • Year 2010
  • Organisation University of KwaZulu-Natal
  • Publication Author(s) Claire Vermaak
  • Countries and Regions South Africa

Session 7A: Survey Data Quality Assessments

  • Year 2010
  • Organisation University of the Witswatersrand
  • Publication Author(s) Gareth Roberts; Natasha Suchecki
  • Countries and Regions South Africa

Session 6A: Subjective Measures of Welfare

  • Year 2010
  • Organisation University of KwaZulu-Natal
  • Publication Author(s) Darma Mahadea
  • Countries and Regions South Africa

Sesssion 5B: Employment Opportunities and Outcomes

  • Year 2010
  • Organisation TIPS
  • Publication Author(s) Kate Philip
  • Countries and Regions South Africa

Session 4B: The Global Crisis and Poverty Outcomes

  • Year 2010
  • Organisation World Bank
  • Publication Author(s) Yoonyoung Cho; David Newhouse
  • Countries and Regions South Africa

Session 2A: Scarce Skills

  • Year 2010
  • Organisation MERSETA
  • Publication Author(s) Salim Akoojee
  • Countries and Regions South Africa

Session 1B: The Financial Crisis: Global and Regional Impacts

  • Year 2010
  • Organisation International Labour Office; American University; International labour Organisation
  • Publication Author(s) Davis Kucera; Leanne Roncolato; Erik Von Uexkull
  • Countries and Regions India, South Africa

This study seeks to model the effects of trade on employment in South Africa in a Labour Demand framework. The study uses aggregated data, as opposed to a number of studies that have used either factor content or growth accounting approaches. The paper specifically seeks to determine the extent to which imports, exports, wages and output have impacted upon employment levels across the primary, secondary, and tertiary sectors. The analysis carried out in the study revealed that the derived labour demand in the primary sector and the secondary industries have been impacted negatively by increased imports. However, there was insufficient statistical evidence from the data to suggest that derived labour demand for any of the sectors was increased by increased exports openness.

  • Year 2010
  • Organisation TIPS
  • Publication Author(s) Evans K. Chinembiri
Published in SADC Trade Development

Unemployment is one of the biggest challenges facing South Africa. Growth has been inadequate, the skills level requirement of new jobs is continually rising, current skills among the workforce are low and inadequate numbers of low end, unskilled jobs are being created. Finding mechanisms to address this challenge is a key to South Africa’s economic success and the social cohesion of communities. This task demands a combination of macro and microeconomic strategies and falls outside the ambit of this project. 

However, with over 500,000 unemployed people applying for placement in a job or for assistance with unemployment insurance through the Department of Labour, and tens of thousands more who are not eligible turning to private and non-governmental organisation (NGO) operators to assist them find work, there is an important role for employment intermediation services in South Africa. Most of those approaching the Department of Labour and the private and NGO operators reviewed in this report are unskilled or semi-skilled workers servicing the lower skills end of the labour market. 

There is, in most countries, a mismatch between the demand for workers and the supply of job seekers. The causes of this vary from country to country and include: limited information and dissemination on job openings, mismatches between the skills of workers and the demand of employers, the increased mobility of labour, changes in the nature of work, a demand for more frequent upgrading of skills, poor job hunting skills by workers, labour market discrimination, and barriers to access, such as geographic location and the high costs of transport. This can contribute and exacerbate unemployment, as well as long term unemployment of certain groups of people, and/or underemployment.

  • Year 2008
  • Organisation NB Ideas In association with Indego Consulting and Strategies for Change
  • Publication Author(s) TIPS
  • Countries and Regions South Africa

According to the International Labour Organisation (ILO) a third of the global workforce is either unemployed or underemployed barely eking out a living through informal work; selfemployment or as wage workers involved in precarious employment. International competitive pressures have led to a restructuring of organizations toward decentralized production networks and employment relationships. A significant global trend over the past two decades has been for firms to depart from the practice of offering long-term stable employment with large scale in-house factory production, and to adopt instead a ‘free agency’ or flexible model of employment, in which an increasing number of employees are classified as temporary. These workers fall outside the scope of legal protection afforded to workers engaged in standard forms of employment. They are either completely excluded from, or on the fringes of, social security protection and receive less favourable benefits than those workers recognized as employees and are accordingly vulnerable to exploitation and deepening poverty.

The Report of the Commission on Legal Empowerment of the Poor has identified the exclusion of the world’s poor from the rule of law as one of the main factors contributing to poverty and inequality in the world. The Commission argues that in affluent countries people are more likely to enjoy access to justice and other rights as workers, businesspeople, and owners of property. Wealth creation in these countries rests upon various legal protections, norms, and instruments governing matters such as property rights and labour contracts and workers associations. However, the legal underpinnings of entrepreneurship, employment, and market interaction are often taken for granted when countries adopt development strategies to overcome inequality and poverty despite the fact that most poor people do not benefit from legal protection and the opportunities it affords.

The Commission concludes that the spread of rule of law counteracts the exploitation of vulnerable participants in the informal economy and compliments other developmental initiatives such as investing more in education, public services, and infrastructure.

The Commission has developed a comprehensive agenda for legal empowerment encompassing four crucial pillars that it has identified as central in national and international efforts to increase protection and opportunities for the poor. These are access to justice and the rule of law, property rights, labour rights and business rights.

The Commission envisages labour regulation. Labour rights should create opportunities for all workers to obtain decent work regardless of whether they work in the formal or informal economy. This approach is in line with the ILO Decent Work Agenda.

  • Year 2009
  • Organisation TIPS
  • Publication Author(s) Paul Benjamin; Nicole Yazbek
  • Countries and Regions South Africa

The adverse micro- and macroeconomic impacts of the HIV and AIDS epidemic is relatively well documented. With the advent of the free provision of antiretroviral treatment (ART) in the public sector, the focus in research on the economics of HIV and AIDS has shifted toward determining how ART may ameliorate the adverse economic impacts of HIV and AIDS. This paper investigates trends and transitions in labour market outcomes using data from a cohort study of patients enrolled in the Free State province's public sector antiretroviral treatment programme during the initial phases of the ARV roll-out. Particular emphasis is placed on the role of treatment dynamics as determinants of observed labour market outcomes, including transitions into and out of the labour force and into employment. Face-to-face, semi-structured interviews were conducted with a total of 254 randomly selected adult public sector ARV clients over the period 2004-08. The dataset includes a total of 1 844 observations, with 195 clients interviewed in all six survey rounds. Following a descriptive analysis of key treatment and labour market outcomes, econometric tools for panel data are employed to investigate how treatment duration and other aspects of treatment dynamics impact on observed labour market outcomes. For comparative purposes, these observed labour market outcomes are compared to those recorded in the general South African and Free State populations during the 2004-07 Labour Force (LFS) surveys as well as those observed among a group of almost 700 ARV clients enrolled into the Free State public sector ART programme in 2007/08. Preliminary results suggest that labour force participation, unemployment and labour force absorption rates among ART patients rise rapidly following positive response to treatment and correspond to levels of labour force participation, unemployment and labour force absorption observed among the general population. As such, universal access to antiretroviral treatment promises to play a significant part in curbing the negative impacts of the HIV and AIDS epidemic on the South African economy.

  • Year 2008
  • Organisation University of Free State
  • Publication Author(s) Frikkie Booysen
  • Countries and Regions South Africa

One of the most pervasive trends in contemporary South African business is the substitution of alternative work forms for full-time, permanent employment. Part-time work and external contracting are used extensively by firms, ostensibly to adjust to altering work conditions. However, relatively little is understood about the process, context and contingencies of these substitutions. The present research focuses on work allocation in the little researched 'creative industries', involving sectors such as audio-visual, design, craft and heritage. Our preliminary cross-sectional analysis of firm-level data illustrates some possible environmental drivers and contexts for the relative switching between full-time, part-time and contracted labour. These include interactions between firm financial growth, employment growth or shrinkage, workforce experience, skills and capital intensity, and age of firm. Conclusions and directions for research and policy are suggested.

  • Year 2008
  • Organisation University of the Witwatersrand
  • Publication Author(s) Gregory John Lee;Ralitza Dobreva
  • Countries and Regions South Africa

This document is part two of a three part report on employment intermediation. Part one provides an overview of the sector, internationally and nationally, and part three captures the recommendations for further work towards strengthening the sector. In this second part of that report, seven case studies of existing employment intermediation services in South Africa are presented.

The case studies attempt to provide an overview of the types of employment services available to unskilled and semi-skilled unemployed people, as provided by the state, the private sector and non-governmental services. The case studies are not a comprehensive overview of the services. Instead, they try to provide insight into the operations of the selected agencies, all of whom target specifically the most vulnerable work seekers, in other words, those who are the long term unemployed, the unskilled and the semi-skilled. Each case study is brief and based on either a two- or four-day engagement.

The first three case studies focus on the public sector. Case study one provides an overview of the public employment service; case study two, a public works programme initiative focuses on the job creation role of the state. Case study three turns its attention to a partnership at local government level aimed at reducing unemployment and improving employment intermediation services. Case studies four and five focus on private sector initiatives that target unskilled and semi-skilled work seekers, namely TEBA Limited (Ltd), an employment intermediation servicing the mines; and labour brokers, a growing industry in South Africa that services the mines, agriculture, construction, manufacturing and retails sectors. The final two case studies focus on non-governmental organisational (NGO) initiatives, both set up in the last few years, where a core focus is employment intermediation. The first of these, Men on the Side of the Road, focuses on a target constituency, namely men waiting on the side of the road, while the other, Work Now, focuses on a geographic area.

What becomes clear from the case studies is that employment intermediation is a burgeoning industry with lots of opportunities and challenges. Where data exist, the benefits of a personalised face-to-face service seem indisputable, both from the perspective of the work seeker and of the employer. These benefits have not been exploited fully. Funding resources are a key challenge for the sector. The sector is uncoordinated and characterised by limited interaction between role players. There is also much overlap between the plans of providers.

Within the unskilled band of work seekers, there are particular sectors where training is relatively short term and demand high, as is the case, for example, among call centre operators. Here, there are numerous private and even some NGO providers that offer success stories linking unemployed people to work opportunities. We have chosen not to focus on this industry given the success of the market in meeting demand.

There are also a range of NGOs that are essentially training organisations that, over time, have incorporated a placement service as part of the aftercare service provided to trainees. Again, these have not been included in the selected case studies as they generally only service trainees and cannot be regarded as an employment intermediation service open to the public or a targeted group within the public.

In conclusion, it is hoped that the selected case studies will provide some insight into the employment intermediation sector and the services available to largely unskilled work seekers.

  • Year 2008
  • Organisation TIPS
  • Publication Author(s) NB Ideas with Strategies for Change and Indego Consulting
  • Countries and Regions South Africa

The Local Labour Promotion Project (hereafter LLPP) has been developed internally within the Overstrand Municipality which is situated in the Overberg District of the Western Cape Province.

The LLPP was developed initially in 2005 to deal with the high level of municipal services arrears owed by unemployed debtors in the area and was aimed at providing work opportunities on small capital projects to enable income generation and debt repayment by the participants. The project has grown over the last three years from providing work to 18 people on two projects and repayment of R246,000 debt in 2005/06 to providing work for 397 people on 75 projects and repayment of R366,620 debt in 2007/08.

  • Year 2008
  • Organisation TIPS
  • Publication Author(s) Overstrand Municipality
  • Countries and Regions South Africa

Unemployment is one of the biggest challenges facing South Africa. Growth has been inadequate, the skills level requirement of new jobs is continually rising, current skills among the workforce are low and inadequate numbers of low end, unskilled jobs are being created. Finding mechanisms to address this challenge is a key to South Africa’s economic success and the social cohesion of communities. This task demands a combination of macro and microeconomic strategies and falls outside the ambit of this project.

However, with over 500,000 unemployed people applying for placement in a job or for assistance with unemployment insurance through the Department of Labour, and tens of thousands more who are not eligible turning to private and non-governmental organisation (NGO) operators to assist them find work, there is an important role for employment intermediation services in South Africa. Most of those approaching the Department of Labour and the private and NGO operators reviewed in this report are unskilled or semiskilled workers servicing the lower skills end of the labour market.

There is, in most countries, a mismatch between the demand for workers and the supply of job seekers. The causes of this vary from country to country and include: limited information and dissemination on job openings, mismatches between the skills of workers and the demand of employers, the increased mobility of labour, changes in the nature of work, a demand for more frequent upgrading of skills, poor job hunting skills by workers, labour market discrimination, and barriers to access, such as geographic location and the high costs of transport. This can contribute and exacerbate unemployment, as well as long term unemployment of certain groups of people, and/or underemployment.

With limited growth and a contraction in jobs in many of the elementary sectors, traditional policy makers in South Africa have focused their interventions on strategies that aim to strengthen businesses and entrepreneurs. It was hoped that doing so would bridge the divide between the first and second economy. Underlying weaknesses in this approach are the assumptions that everyone has the capacity to be entrepreneurial and that there are level playing fields in the market.

Employment intermediation efforts break from this mould and focus on linking the unemployed into the formal job market primarily as workers but also as trainees and business owners. It is one policy vehicle intended to improve the quality and efficiency of the match of work seekers (supply) and jobs (demand). The employment intermediation sector is a lucrative and competitive sector containing a diversity of operators. Historically, the instrument has been used extensively within the professional, skilled stratum of work seekers which is serviced largely by the private, for-profit agencies and by specific sectors, such as the mining and construction sectors, at the bottom end of the skills spectrum. Interestingly, the number of private operators at the bottom end of the market has increased while the number of NGO and church providers has decreased. Despite this, the market is not evenly serviced and large numbers of people do not have access to intermediation services.

There are many benefits to employment intermediation. Firstly, the service provides increased accessibility to market information to the marginalised, thereby broadening the range of jobs opportunities for which they can apply. Secondly, it transforms nameless faces into people, each with their own story, aspirations and skills offering. This profiling assists in marketing the person and her skills in a similar manner as that offered by private employment agencies within the upper ends of the job market. Doing that helps to match work seekers with available opportunities. Thirdly, employment intermediation agencies offer some security to employers who can contact the agency in the knowledge that they have a track record of those work seekers; that increases the chance of a successful placement. Similarly, employees have a lower chance of job rejection, owing to the matching and job screening undertaken by the agency. Fourthly, employment intermediation also offers opportunities to integrate better training and placement services. The employment intermediator generally has a good knowledge of the labour demands in the market and of the skills base of work seekers. This enables them to target training and subsequent placement more effectively. Fifthly, employment intermediators assist in finding, and at times creating, new opportunities with their proactive lobbying of employers to identify job opportunities. Finally, some services, such as labour brokerage, provide additional services such as transport or aftercare support and mentoring.

Employment intermediation works well in situation of economic growth or where mismatches exist. In situations of economic decline or oversupply other strategies are needed.

  • Year 2008
  • Organisation TIPS
  • Publication Author(s) NB Ideas with Strategies for Change and Indego Consulting
  • Countries and Regions South Africa

This study seeks to understand the labor market (employment and earnings) and gender impacts of the dramatic recent expansion of the export processing zone (the Zone Franche) in urban Madagascar. It is distinguished from most earlier empirical analysis of this subject by its use of micro data collected annually over the 1995-2002 period, and by its focus on a setting in Africa, where export processing manufacturing generally has yet to make significant inroads. As in other EPZs, workers in the Zone Franche are predominantly female, semi-skilled, and young. Controlling for worker characteristics, earnings in the Zone Franche are comparable to the private formal employment, lower than in the public sector, but much higher than in informal wage employment. By disproportionately drawing women from the low wage informal sector (where gender pay gaps are very large) to relatively well paid export processing jobs (where pay is not only higher but also similar for men and women), Zone Franche growth has the potential to contribute substantially to improved overall gender equity in earnings in the urban economy. Still, it is too early to judge whether the sector will be a source a source of long term employment characterized by continued investments in worker human capital and job advancement, or instead will conform more to the stereotypical negative picture of offering only short term jobs providing few transferable skills.

  • Year 2004
  • Publication Author(s) Peter Glick; Francois Roubard
  • Countries and Regions Common Market for Eastern and Southern Africa (Comesa)

This paper investigates the relationship between education and unemployment in post-apartheid South Africa, and probes the argument that employment growth has been inhibited particularly by skills constraints. We use probit regression analysis to show that higher education protected against unemployment in both 1995 and 2003, and that overall, the relative benefits to tertiary education rose over the period. We show also that these aggregate trends mask substantial variation among race groups and within race groups, among men and women. However, after taking into account changes in the survey instruments used to measure employment, we find only modest evidence of skills-intensive employment growth. Rather, the increase in formally qualified labour was considerably larger than the increase in demand for skilled and semi-skilled labour over the period, and so unemployment rates even among graduates increased over the period.

  • Year 2006
  • Publication Author(s) Dorrit Posel and Rosa Dias
  • Countries and Regions South Africa

This paper empirically contributes towards the debate between the human capital and screening theories. Using South Africa's September 2004 Labour Force Survey data, and after controlling for self-selection, the weak and strong versions of screening hypothesis are tested. The honour's degree, and certificates or diplomas got without grade twelve, provide evidence for the SSH for both public and private sectors, as per the Wolpin (1977) methodology. The same methodology yield evidence in support of the WSH, at the masters and beyond certificate levels in the private sector, but stretching lower to include all other credentials up to and including certificates or diplomas got after grade twelve, in the public sector. Support for the WSH as per the Psacharopoulos (1979) methodology, prevails across the certificate levels, for the entire screened sample. The human capital theory, per se, is supported in the private sector for credentials below the honour's, except for certificates or diplomas got without grade twelve. There is no evidence to support the use of education entirely for its skills bestowing role in the public sector. Results from the Altonji and Pierret (1996) methodology do not also confirm any post-employment screening, whatever the sector. (Words :194)

  • Year 2006
  • Publication Author(s) Steven F Koch and Simon Ssekabira Ntege
  • Countries and Regions South Africa

This paper integrates two mechanisms of economic growth barriers to international spill-overs and skill-biased effects on the income distribution. South Africa (SA) is an interesting case study because of dramatic changes in international barriers over time and policy focus to productivity and distribution. Barriers affect the balance between innovation and adoption in the productivity growth and thereby the skill bias. The productivity dynamics and the distributional implications are investigated in an inter-temporal Ramsey growth model. The model offers a calibrated tariff equivalence measure of the sanction effect and allows for counter-factual analysis of "no-sanctions".

Increased openness is shown to reduce barriers to technology adoption, leading to skill-biased economic growth and worsened income distribution. The result is consistent with the observation that economic growth under sanctions has been slow and with an increase in the relative wage of unskilled labour. The trade-off between barriers and skill bias, foreign spill-over driven by productivity growth and income distribution is obviously a challenge for growth policy.

  • Year 2005
  • Publication Author(s) Jorn Rattso; Hildegunn Stokke
  • Countries and Regions South Africa

Minimum wages have been in place for South Africa's one million domestic service workers since November of 2002. Using data from seven waves of the Labour Force Survey, this paper ocuments that the real wages, average monthly earnings, and total earnings of all employed domestic workers have risen since the regulations came into effect, while hours of work per week and employment have fallen. Each of these outcomes can be linked econometrically to the arrival of the minimum age regulations. The overall estimated elasticities suggest that the regulations should have reduced poverty somewhat for domestic workers, although this last conclusion is the least robust.

  • Year 2005
  • Publication Author(s) Tom Hertz
  • Countries and Regions South Africa
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