The Impact of Globalisation on the Labour Market: The Case of Namibia

This paper investigates the economic impact of globalisation on the Namibian labour market. It deals with how trade liberalisation, which is just one dimension of globalisation, impacts on the labour market, and therefore outlines possible indicators of the links between liberalisation and employment. The paper argues that the economic returns from greater openness are indisputable, but are perceived as having been unevenly distributed both between and within countries. For some groups, the rising flow of trade and capital has heightened the sense of vulnerability. Workers in industrialised countries fear being displaced by cheaper labour in developing countries. Developing countries think that the continuing globalisation, particularly of capital markets, will lead to greater volatility in their national economies, which will damage their growth performance. This is a fear that has been raised by the labour movement in Namibia and South Africa. Thus, globalisation is often associated with greater unemployment and social collapse. Without a doubt, globalisation impinges on development from several directions. Of greatest significance for national policy are: growth of trade, capital flows and financial capability, migration, information technology and the Internet, and the diffusion of technology. We argue that all parts of the world are affected by globalisation through these channels, but it is important to remember that the full force of change is felt by a relatively small number of upper and middle-income countries whereas most poor countries are left out. Most economies are only partially integrated into the global system and Namibia, as part of SACU, is no exception. Naturally, while this insulates closed economies to a degree from the risk of turbulence associated with volatile short-term capital flows it also prevents these countries from tapping the resources, energy and ideas inherent in globalisation. Africa in particular is relatively closed and thus lagging behind in terms of economic development. Using standard trade theory we theoretically and empirically (albeit with limited success) explore the effects of trade liberalisation on employment in Namibia. The paper notes that the Namibian economy specialises in capital-intensive sectors and that formal sector-wage inequality is rising, which begs the questions. Is trade the culprit? Finally, the paper advances some policy considerations; whilst at the same time acknowledging that analysing the impact of trade (globalisation) remains a difficult but important process.