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Labour Market Challenges in the Post-Apartheid South Africa

Haroon Bhorat1

Posted with permission of the author.
This paper was used as a backgrounder for the EFSA poverty and inequality report, posted earlier on the SARPN website.
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Introduction

Following the onset of democratic rule in South Africa in April 1994, it soon became clear that the transition was a political one, in the narrowest sense of the term. Specifically, the new South African government has been, and indeed continues to be, beset with the longer term and more inertial consequences of apartheid. These consequences can be represented generically as the economic outcomes engendered by the policy of legislated racial exclusivity. Nowhere is this challenge more acute than within the arena of the labour market. The ability, or lack thereof, of the domestic economy to generate a sufficient quantum of jobs has constantly come under policymakers' scrutiny. The focus of this paper then is to attempt to document and identify the key trends in the labour market - in an attempt at hopefully understanding the factors that may be driving the performance of this factor market.

Conclusion

The above has attempted to present some of the key empirical co-ordinates that define the South African labour market in this post-apartheid period. The data shows that the notion of 'jobless growth' for the South African economy, is clearly erroneous. The important caveat to this reasoning though, is that the labour force has simultaneously grown at a higher rate than employment. In net terms then, employment expansion has been relatively poor. On the back of unspectacular economic growth, this result is not surprising. However, the cohort analysis of employment and labour absorption trends did make it clear that the labour market challenge cannot be overcome purely through the growth process. The paper also attested to the specific supply characteristics that identify the unemployed with age and education level being important markers of joblessness. Of particular note though, was the result yielded from the data, that South Africa appears to be at the beginning of a growing graduate unemployment problem. Finally, given the importance of household support to these zero earners in the labour market, we explored the relationship between the employed and unemployed at the household level. There was consistent evidence, in a variety of different guises, that the unemployed reside in poorer and generally more vulnerable households. The jobless then, are divorced from gainful employment at an individual-level, and furthermore find themselves relatively more welfare-constrained at the household level as well, than their counterparts in the labour market who do have employment.

Given the unevenness of the economy's growth generation - both in terms of sectoral expansion and skill requirements - a fair degree of intervention is clearly required on the labour supply side. Put differently, the simultaneous existence of a skilled labour shortage and unskilled labour surplus, points to the importance of adhering to a policy framework that emphasises both the need to kick-start economic growth as well as ensuring that the characteristics of the suppliers of labour match those in demand by growing sectors.


Footnote:
  1. Director, Development Policy Research Unit, University of Cape Town. All comments can be directed to hbhorat@commerce.uct.ac.za


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