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The post-apartheid South African labour market

Haroon Bhorat, Morne Oosthuizen
Contact: hborat@commerce.uct.ac.za

Development Policy Research Unit (DPRU) / University of Cape Town (UCT)
Working Paper 05/93

April 2005

SARPN acknowledges permission from the Development Policy Research Unit at the University of Cape Town to post this paper on the SARPN website.
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Abstract

Since the demise of apartheid, the South African economy has undergone significant changes with the government implementing various policies aimed at redressing the injustices of the past, fleshing out the welfare system and improving competitiveness as the country becomes increasingly integrated into the global economy. These policies have, directly or indirectly, impacted on the labour market and, consequently, on the lives of millions of South Africans.

This paper provides an analysis of some of the important changes that have occurred in the South African labour market since 1994. The paper presents the broad changes in employment, unemployment and labour force participation, finding substantial increases in unemployment and labour force participation rates for all race and gender groups. Employment performance is investigated in the context of economic growth and it is shown that recent economic growth cannot accurately be termed ‘jobless growth’, particularly given doubts about the consistency of the datasets. Employment change is also analysed by sector, occupation and skill category, as well as by various demographic and locational variables. The characteristics of the unemployed are presented, as are those of households in which the unemployed locate themselves. An important finding here is the rapid increase in the number of unemployed individuals with relatively high levels of education (e.g. complete secondary and tertiary education). Furthermore, unemployed individuals appear to be increasingly marginalised in households with no wage or salary earners, raising the demands placed on elderly household members’ state old age pensions and other grants. The paper ends with a brief discussion of the group of individuals referred to as ‘discouraged work-seekers’, namely those individuals who are unemployed according to the expanded definition of unemployment, but who are defined as outside the labour force by the official definition.

Introduction

Since 1994, the South African economy has undergone significant changes with the government implementing various policies aimed at redressing the injustices of the past, fleshing out the welfare system and improving competitiveness as South Africa becomes increasingly integrated into the global economy. These policies have, directly or indirectly, impacted on the labour market and, consequently, on the lives of millions of South Africans.

The chief objective of this paper is the analysis of some of the changes in the South African labour market in the post-apartheid era. The period, between 1995 and 2002, began with much promise and many challenges as the economy liberalised and normal trade relations were resumed with the rest of the world. Soon after the African National Congress came into power, the macro-economic strategy named “Growth, Employment and Redistribution” (or GEAR) was unveiled in 1996. This strategy predicted, amongst other things, employment growth averaging 270 000 jobs per annum from 1996 to 2000, with the number of new jobs created rising over time from 126 000 in 1996 to 409 000 in 2000 (GEAR 1996). Unfortunately, for a variety of reasons, these projections were not realised. In fact, in terms of the labour market, the experience of the second half of the 1990s appears to have fallen short of even the baseline scenario contained in the GEAR document, which projected a net increase in (non-agricultural formal) employment of slightly more than 100 000 jobs per annum.

Consequently, the performance of the labour market and the various policies that impact on this critical factor market have come under increasing scrutiny. At the same time, there is a certain degree of confusion as to the actual performance of the labour market since 1994/5. This is due largely to the flaws that exist in the period’s early surveys and the consequent refinement and improvement of the questionnaires. Furthermore, different groups of surveys estimate different employment numbers for the same period, due to differences in their design.

In this paper, developments in the South African labour market over the period 1995 to 2002 are analysed. Section looks at the labour force, quantifying employment, unemployment and thereby the labour force, and investigates some of the changes in the labour force participation rates of various groups. In section, employment is analysed, with reference specifically to sector, occupation, skills and education, and location. Section focuses on the characteristics of the unemployed, as well as the households in which they find themselves, while section investigates some contrasting characteristics of the employed and unemployed that did not necessarily emerge clearly from the previous two sections. Finally, a brief initial look at the group of individuals who have given up looking for employment, termed ‘discouraged work-seekers’, is provided in section.



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