(Un)employment in South Africa

Impact of trade & structural changes on employment   26-Jan-01
Summary :
According to the Impact of Trade and Structural Changes
on Sectoral Employment in SA by the Trade and Industrial Policy Secretariat, the primary sector has shed almost 1.5 million jobs between 1970 and 1995. The service sector showed marginal employment growth, whilst the manufacturing sector created 400 000 new jobs during this period. However the paper finds that these sectoral trends are concurrent with occupational trends which show a significant increase in the demand for highly skilled workers compared to the unskilled.
Conclusion :
  • The trends are as expected and strong demand highlights the shortage of highly skilled employees in SA. Rising capital intensity and increased computerization were found to be reasons for the increased demand for highly skilled workers. Furthermore many workers are emigrating from South Africa which is causing the skills base to contract. Solutions include training of semi- and low-skilled employees to take their places and increased incentives and staff retention programs.
  • The study shows that the employment of all workers grew by occupation, race and education level as a result of foreign trade between 1970 and 1995. But skill level, race and education played a telling role in the increased employment levels. Unskilled and low-skilled workers also gained from foreign trade but less significantly. However, the manufacturing sector goes against this trend as between 1970 and 1988 the unskilled gained more than the skilled from international trade although the reverse trend was exhibited between 1993
    and 1997.
  • Lastly, a structural shift has been found to have taken place in the SA economy in the last 25 years due to a move away from the dependence on the primary sector with a rapid rise in the services sector occurring. This structural shift has been a very important component in the determinant of employment changes. Specifically, the decline in the primary sector has been one of the greatest reasons for the job-losses of the unskilled.

Statistics SA in conjunction with the Department of Labour recently
released a publication entitled mean and minimum wages

Summary : Two arguments were put forward Indications:
(1) wages are currently "too high and have a negative effect on the economy's international competitiveness and its ability to increase employment" and

(2) "economic growth is unlikely to be achieved on the basis of low wages paid to significant numbers of workers". The second view sees low wages as a form of subsidy which enables organisations that are unprofitable and inefficient in the economic sense to continue operating. In this case labour market intervention is viewed as necessary in order to bring about restructuring and innovation and to alleviate poverty and inequality

 The findings indicate that income inequality in South Africa is based on industry, skill, gender, race and geographical location. There is also a positive correlation between education and the level of wages. The level of actual earnings shows a correspondence with institutional influences such as unions. Finally the regulated minimum wage bears little correspondence to the actual level of wages earned, especially amongst the lowest skilled workers.

see also New Developments in Labour Market Statistics from Stats SA.

OHS'98 - Is news really positive on the employment front?

Summary & Conclusion Indications:
Summary : Statistics SA have released figures in the October household survey for 1998, showing that employment has, contrary to expectations, actually increased from 1996 to 1998. However, this marginal increase (1.1%) has chiefly come from the sharp (32%) growth in informal sector employment over this period, where informal sector employment is defined by Stats SA as unregistered business "run from homes, street pavements or other informal arrangements". Formal sector workers who have lost their jobs have found work mainly in the agriculture and informal sectors over this period. However, the substitution of formal sector work for informal work is not as desirable a solution as may first be believed.

Conclusion : Amongst the jobs classed as informal sector employment are activities at sub-subsistence level such as the sale of self grown subsistence vegetables, "car guards" or those selling self made bead work on pavements. While providing a marginal means raising some money, these jobs cannot support an individual or a whole family nor do they do they contribute to the upliftment of the poor by failing to provide skills or increase productivity levels. In comparison, formal sector jobs are relatively secure and well paid, providing incumbents with a certain level of skills. This "solution" to formal sector job loss is unlikely to appease COSATU who has recently a held a strike against the high levels of unemployment (the official level of unemployment in 1998 was 25.2%).

Racial job inequality further problem : Unemployment is a very emotive issue and the social unrest which it will generate in the longer term will just be exacerbated by the very unequal distribution of jobs along racial lines. In 1998 (latest statistics), African females in non-urban areas faced the highest levels of unemployment (39.9%) against White urban males who faced the lowest levels of unemployment (4.2%). Africans faced a total unemployment level of 33.4%, Coloureds 15.8%, Indians 14.8% and Whites a low 4.5%. SA's unemployment problems remain a powder keg which is in no way defused by the latest employment figures.

Annabel M. Reinhardt

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01-Mar- 04