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The state of the labour market in South Africa after the first decade of democracy

CSSR Working Paper No. 133

Rulof Burger, Ingrid Woolard

Centre for Social Science Research (CSSR)

October 2005

SARPN acknowledges permission from CSSR to post this document - www.cssr.uct.ac.za
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Abstract

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.

Introduction

The first democratically elected government of South Africa inherited a labour market in 1994 that had been subject to the long-run effects of an inadequate education system, international economic isolation and economic policies that favoured capital over labour. A decade later, acute labour market challenges remain. The inability of the economy to provide enough jobs to keep pace with the growing labour force, let alone reduce the unemployment rate, has proved particularly intractable for the post-apartheid government.

Given that employment is the main bridge between economic growth and higher living standards, job creation is clearly central to South Africaís economic transformation. The governmentís commitment to this objective was formalised in 1996 with the introduction of the Growth, Employment and Redistribution (GEAR) strategy. Previously rigged along racial lines, the post-apartheid labour market has been recast against a new set of rules that include legislation promulgating affirmative action and redefining labour relations. This paper aims to provide an overview of the current state of the labour market against this transformation backdrop, examining in particular trends in employment and labour market participation on the one hand and the features of South Africaís sizeable unemployment problem on the other hand.

Within the labour market, we evaluate the characteristics of the unemployed, with a view to understanding the high degree of persistence of poverty and inequality in South Africa. An overview of macroeconomic trends and their relevance to the labour market is also provided so that we gain some idea of likely future trends in employment.



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