The State of the Labour Market in South Africa after the First Decade of Democracy

While the political transition to democratic rule in South Africa was smooth and rapid, the economic transition has been slow and difficult. Nowhere is this more apparent than in the labour market. Job creation has not matched the growing labour supply and the unemployment rate continues to rise. This paper attempts to document and identify the key trends in labour force participation, unemployment and employment so as to better understand the factors that drive the performance of the labour market.

Wage trends in post-apartheid South Africa: Constructing an earnings series from household survey data

This paper examines South African wage earnings trends using all the available post-1994 household survey datasets. This allows us to identify and address the sources of data inconsistencies across surveys in order to construct a more comparable earnings time series. Taking account of the inconsistencies in questionnaire design and the presence of outliers, we find that it is possible to construct a fairly stable earnings series for formal sector employees. We find that claims that workers have on average experienced a substantial decrease in their real wage earnings in the post-apartheid era is based on choosing datasets on either side of Statistics South Africa’s changeover from October Household Surveys (OHS) to the more consistent Labour Force Surveys (LFS), which caused a discontinuous and inexplicably large drop in average earnings. The data actually show an increase in real wage earnings in the post-transition period for formal sector employees, and does not appear to provide strong evidence of decreasing wages in the informal economy. The paper also investigates the change in the distribution of earnings, as well as mean earnings trends by population group, gender and skill category.South Africa, Earnings, Wages, Labour market trends

Teacher pay in South Africa

The role of teachers in achieving good quality education is universally acknowledged. What is less clear is what incentives are required to attract good teachers to teaching. Incentives, including teachers pay, need to be sufficient yet, in the light of fiscal resource constraints, not excessive. This paper deals with the issue of teacher pay in South Africa before the introduction of the recent Occupation Specific Dispensation (OSD) for teachers, that was intended to offer more attractive lifetime incentives to teachers in order to attract quality teachers. The paper first reviews the literature on teacher pay internationally and for South Africa, before using recent South African household surveys to empirically compare the wage received by teachers to that received by non-teachers with a similar level of education.teacher pay, wages, labour market, incentives

Determining the Causes of the Rising South African Unemployment Rate: An Age, Period and Generational Analysis

This paper takes advantage of the wealth of cross-sectional household surveys conducted after South Africa’s political transition, in order to gain insights into the causes of the acceleration in the already high unemployment rate. A synthetic panel dataset is constructed to decompose unemployment and other labour market outcomes into cyclical, generational and life-cycle effects. This dynamic view isolates which groups are at risk across the period and allows a more nuanced understanding of the long-run and short-run impacts. Our results indicate that the higher unemployment rates faced by the young are predominantly due to the disadvantage of entering the labour market more recently, rather than being attributable to their age. We furthermore isolate what has driven this long-run increase in labour market participation. In particular, higher educational attainment and household formation decisions across generations fuel labour supply among the more recent entrants. We find some correspondence between the cyclical variation in unemployment and the business cycle. This suggests that jobless growth is not a relevant feature of the South African labour market. This paper confirms many of the causes of unemployment that are postulated in the literature. The dynamic nature of this study has furthermore allowed the separation of short-run and long-run aspects of unemployment. The decomposition approach adopted here has uncovered the linkages between the schooling system and the labour market across all generations, but, in particular, has isolated why the youngest generations have exhibited such distinct risks. The surge in labour supply amongst most recent generations (those aged 20 in 1995) can be explained by rapid exit rates from the education system resulting from over-age enrolment policies enacted in the post-apartheid period. This has pushed individuals into the labour market prematurely and without the adequate skills to be absorbed into the workplace. The importance of the generational aspects of unemployment relative to life cycle and business cycle impacts suggests that policies should address the structural issues affecting each of these birth cohorts, rather than focussing on age groups per se.Unemployment, Participation, Feminisation of Labour Force, Education Policy, Birth Cohort Panels, Age-Period-Cohort Decompositions

Determining the Causes of the Rising South African Unemployment Rate: An Age, Period and Generational Analysis

This paper takes advantage of the wealth of cross-sectional household surveys conducted after South Africa’s political transition, in order to gain insights into the causes of the acceleration in the already high unemployment rate. A synthetic panel dataset is constructed to decompose unemployment and other labour market outcomes into cyclical, generational and life-cycle effects. This dynamic view isolates which groups are at risk across the period and allows a more nuanced understanding of the longrun and shortrun impacts. Our results indicate that the higher unemployment rates faced by the young are predominantly due to the disadvantage of entering the labour market more recently, rather than being attributable to their age. We furthermore isolate what has driven this longrun increase in labour market participation. In particular, higher educational attainment and household formation decisions across generations fuel labour supply among the more recent entrants. We find some correspondence between the cyclical variation in unemployment and the business cycle. This suggests that jobless growth is not a relevant feature of the South African labour market. This paper confirms many of the causes of unemployment that are postulated in the literature. The dynamic nature of this study has furthermore allowed the separation of short-run and long-run aspects of unemployment. The decomposition approach adopted here has uncovered the linkages between the schooling system and the labour market across all generations, but, in particular, has isolated why the youngest generations have exhibited such distinct risks. The surge in labour supply amongst most recent generations (those aged 20 in 1995) can be explained by rapid exit rates from the education system resulting from overage enrolment policies enacted in the post-apartheid period. This has pushed individuals into the labour market prematurely and without the adequate skills to be absorbed into the workplace. The importance of the generational aspects of unemployment relative to life cycle and business cycle impacts suggests that policies should address the structural issues affecting each of these birth cohorts, rather than focussing on age groups per se

The nexus between social grants and participation rates: Dynamics across generations in the South African labour market

This paper will have a closer look at the role of South African welfare programs on the labour supply decision across generations. From a theoretical point of view, a change in non-labour household income will affect the decision to participate in the labour market. Previous studies have focused on prime age adults and elderly and could confirm a significant decrease in labour supply of individuals living in a pensioners household. However, past research did not look at the intergenerational pattern and broader socio-economic conditions when evaluating the impacts of social grants. Our preliminary results suggest that the behavioural response to welfare programs differs by age group. In particular, labour supply of the young living in a pensioner's household has increased. Also, intergenerational differences in participation rates can be explained by educational policies, designed specifically to address over-age students in the public schooling system. --labour market participation,social grants,South Africa

Labour market turnovers among South African youths

We describe the labour market turnovers of young people using a household survey data collected from Cape Town industrial area. We measure the correlates of first unemployment duration out of school and find that matriculation and late cohort (leaving school after 2007) are related with reduced initial unemployment, yet matriculation impacts are reduced among late cohort relative to early cohort. Our estimation reveals that initial unemployment is not related with subsequent employment duration nor wage rates, but related with number of turnovers which suggests that a shorter spell is associated with more stable job tenure

A series of national accounts-consistent estimates of poverty and inequality in South Africa

This paper makes a unique contribution to the South African literature in combining data from an alternative source of household survey data – the All Media and Product Survey (AMPS) – with national accounts income trends for this country, in the recent tradition of research on the world distribution of income performed by Bhalla (2002), Karshenas (2003), Bourguignon and Morrisson (2002), Sala-i-Martin (2002a; 2002b), and Quah (2002), amongst others. Its usefulness lies in arriving at alternative estimates of post-transition poverty and inequality that are consistent with the story that national accounts and other official data collectively tell us about the path of the South African economy during the post-transition period. While the method of scaling survey distribution data by national accounts means is somewhat controversial, it is not clear that the distributional trends obtained using the post-transition sets of either the IESs or the Population Censuses are more reliable, given serious deficiencies in both sources of data. Adjusted distributions yield lower levels of poverty and a stronger decline in poverty during the second half of the period than the figures obtained from the raw AMPS data. While the levels of poverty obtained using adjusted income distributions are artificially low, the derived downward trend is supported by a number of official data sources.Poverty, Inequality, Income distribution Analysis, South Africa

Trends in poverty and inequality since the political transition

Using a constructed data series and another data series based on AMPS (the All Media and Products Survey), this paper explores trends in poverty and income distribution over the post-transition period. To steer clear of an unduly optimistic conclusion, assumptions are chosen that would tend to show the least decline in poverty. Whilst there were no strong trends in poverty for the period 1995 to 2000, both data series show a considerable decline in poverty after 2000, particularly in the period 2002-2004. Poverty dominance testing shows that this decline is independent of the poverty line chosen or whether the poverty headcount, the poverty ratio or the poverty severity ratio are used as measure. We find likely explanations for this strong and robust decline in poverty in the massive expansion of the social grant system as well as possibly in improved job creation in recent years. Whilst the collective income of the poor (using our definition of poverty) was only R27 billion in 2000, the grants (in constant 2000 Rand values) have expanded by R22 billion since. Even if the grants were not well targeted at the poor (and in the past they have been), a large proportion of this spending must have reached the poor, thus leaving little doubt that poverty must have declined substantially. However, there are limits to the expansion of the grant system as a means of poverty alleviation, pointing to the importance of economic growth with job creation for sustaining the decline in poverty.poverty, inequality, South Africa, employment

An econometric method for estimating population parameters from non‐random samples: An application to clinical case finding

The problem of sample selection complicates the process of drawing inference about populations. Selective sampling arises in many real world situations when agents such as doctors and customs officials search for targets with high values of a characteristic. We propose a new method for estimating population characteristics from these types of selected samples. We develop a model that captures key features of the agent’s sampling decision. We use a generalized method of moments with instrumental variables and maximum likelihood to estimate the population prevalence of the characteristic of interest and the agents’ accuracy in identifying targets. We apply this method to tuberculosis (TB), which is the leading infectious disease cause of death worldwide. We use a national database of TB test data from South Africa to examine testing for multidrug resistant TB (MDR‐TB). Approximately one quarter of MDR‐TB cases was undiagnosed between 2004 and 2010. The official estimate of 2.5% is therefore too low, and MDR‐TB prevalence is as high as 3.5%. Signal‐to‐noise ratios are estimated to be between 0.5 and 1. Our approach is widely applicable because of the availability of routinely collected data and abundance of potential instruments. Using routinely collected data to monitor population prevalence can guide evidence‐based policy making.Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/138309/1/hec3547.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/138309/2/hec3547_am.pd